‘You have to take risks to make returns’

“The kind of person that I am [means] I try to pick things to do that I really don’t know anything about,” she explains.

Growing up in Holland, she acknowledges that “I thought I could do anything I wanted, and fund manager wasn’t on my list”.

Instead, she opted for a degree in health sciences as she liked all the topics. “It was sort of medicine-like, but not quite medicine because I knew I didn’t want to be a doctor,” she laughs.

“I [wanted] to know a bit more about psychology, sociology, anatomy and all those kinds of things. So it was lovely to study, but then I realised it would mean I’d probably [have to] work in a hospital, as it’s all about trying to make hospitals run better.”

Looking for something that would move her away from hospitals she opted for an MBA at City University, now Cass Business School, and she and her husband moved from Amsterdam to London.

In her second year, the trait of picking things she’d never tried before led her to specialise in mainly financial-related topics. “One of my elective [courses] was futures and options as I didn’t know anything about it. In my first lecture, I sat there thinking I don’t understand a word this man is saying,” she smiles.

“So I just worked hard and got a high mark and really enjoyed it. In the end I came out thinking I really like this financial angle; I can do this.”

On finishing her MBA her options were with a firm that advised on mergers and acquisitions or fund management, possibly focusing on Europe. “I thought that being Dutch I should surely know stuff about Dutch companies, and I thought the European angle was probably a pretty natural angle,” she says.

Ms Frikkee secured a job as an assistant fund manager on the UK desk at Newton and hasn’t looked back, even though she took the job on the basis she’d find the topics interesting but had no idea if she’d be a good fund manager.

“It’s funny how life sometimes goes,” she says. “I knew I wouldn’t like working in hospitals, but I didn’t know I would love being a fund manager, but I do. Sometimes luck and faith play a role in all our lives. I love that every day is different, and I love learning and the variety.”

Given her background it’s not surprising that her process is somewhat “academic and analytical” through building spreadsheets and models for each company.

“There are lots of different ways – my method is I model all companies in the same way and look at them across 10 years,” she explains. “I look at their profitability, their balance sheets, their cashflow conversions, their multiples and how much the market has been prepared to pay for these firms over the years.

“In picking my stocks I’m a bit of a mean reverter [stocks that go back to their original average], so I find stocks interesting that are trading around the 10-year average. They don’t have to be dirt cheap or bargain basement. You have to take risks to make returns, but I like the risks to be measured.”

Unsurprisingly, when assessing companies Ms Frikkee has “quite high demands” on those that make it into her portfolio, but at the same time she highlights the importance of patience in waiting until the price is right.

She says: “I love the modelling bit and trying to come up with a conclusion – is this a buy or a sell? I’m a very patient person. It can be a great business, but if I think it’s too expensive I put in ‘at what price would I buy this company?’ Then I put that into my buy/sell spreadsheet and I move on. There are a lot of firms that I think are fantastic but I might never own as they look too expensive.”

Ms Frikkee seems content in her current role as she nears her two-year anniversary at Smith & Williamson, where she joined to take over the UK Equity Income fund.

“There is no Smith & Williamson [house] approach to investment,” she says. “If there is one ethos of the firm it is to try and lose as little as possible when the market goes down. It is a wealth manager ethos and it firmly fits with how I invest.

“I don’t need to be the best fund in a bull market. I’m aiming for a pattern where I keep up when the market goes up and go down less when the market goes down. I’m firmly focused on delivering a return with lower volatility.”

While clearly very focused on her job, Ms Frikkee also has a good work-life balance, starting early but leaving in time to “hang out” with her kids in the evening and maybe play on the piano or indulge in some baking.

“I try to have a life with my family as well; I need to do other stuff. I can still be passionate [about work] but by 5pm I can be playing Beethoven,” she says. “It is also important for me when I’m trying to think things through. Sometimes I get stuck and I need to lift myself out and do something completely different, whether that’s teaching Latin to my daughter, or playing music or baking a French apple cake.”

Since joining Smith & Williamson, Ms Frikkee’s UK Equity Income fund has increased in size from £8m to roughly £45m, while from July 1 2013 to June 10 2015 it returned 28.83 per cent, outperforming both the IA UK Equity Income sector and the FTSE All-Share index.

But while performance is important, she emphasises that the main thing for her investment style has always been a focus on dividend growth and greater downside protection in falling markets. She says: “This is my investment principle: I want to lose less money, but also to adapt to the markets.

“If I think I can continue making money, I want to keep making money. At the moment [the portfolio is] in capital-protection mode rather than money-making mode – it is adapting to circumstances. I’m a firm believer in being a consistent investor, but markets are the inconsistent bit,” she smiles.

Ms Frikkee therefore enjoys the flexibility of a smaller fund and the ability to hold 13 per cent in cash if there is nothing she wants to buy.

“You can be patient and you don’t have to be in the market, and Smith & Williamson allows me to do that,” she says. “I ran a very large fund at Newton where you can’t move in and out of the market like that, because you can’t establish positions quickly enough. That is what appealed [to me], and that’s why I joined Smith & Williamson as I was given carte blanche to run the fund as I wanted to.”

But while she would like to manage more money – “going from £8m to £800m has a nice sound” – she is adamant about keeping the fund nimble. “I don’t want to run a really big fund,” she says. “I’ve done that and it doesn’t excite me.”

She doesn’t rule out eventually soft closing the fund should it start to get substantially bigger in the future. “Smith & Williamson understands that if a fund becomes too big you can’t run it the way you’ve said you would,” she says. “So I think we would soft close it and I would push hard for that, because otherwise [the fund would] become like the others and there are plenty of those already.

“In my mind I can run this [fund] up to about £1bn, so [I would] probably soft close it at £800m. It seems weird talking about this when it’s only £45m, but it’s important to me to run it right and there will be a size where I can’t do that and I don’t want to get there.”

She points out the UK equity income market has become polarised with a handful of really big funds with very good managers. “But what can you do when you run so many billions? I ran about £4bn of funds and my approach was constrained by the size of assets. I’ve done 15 years of big and constrained, [whereas] the next 15 years can be exciting,” she laughs.

“I think it’s a fantastic job and it’s measurable. I’m competitive so I like to do well, but I also know I can’t get every stock right. I see my job as getting more right than wrong and learning from the ones where I could have done better. I’ve been in fund management since 1998, so I’m hoping that every year, I’m a little bit better, a little bit smarter and a slightly better fund manager, or making different mistakes,” she smiles.

CV

Tineke Frikkee

2013 – present

Fund manager, Smith & Williamson

2002 – 2013

Fund manager, Newton

1998 – 2001

Assistant fund manager, Newton