Few people, perhaps, wake up one day and say they want to be a fund manager, but having a parent that works in the financial services world in one form or another certainly provides a degree of familiarity.
For Alan Custis, head of UK equities at Lazard Asset Management, the fact his father was a finance director at a large public company helped to make him aware of investment as a potential career path.
The manager explains: “In my formative years, that shaped an area of interest in financial services and the role the fund manager plays. So there was a degree of familiarity with the industry and how it worked.”
But rather than going straight into finance, he joined the army straight from university for a short service commission, as “I wasn’t quite clear in the direction I wanted to take”.
Army life was not for him, although he admits the army training has left him with a hankering for the outdoors, which has seen him climb Mount Kilimanjaro.
“Some days I never go outside. I can come out of Green Park [underground station], come to the office, then get on the train home, walk to my car and be outside for just 40 yards in a day,” he opines.
On leaving the army, Mr Custis joined Morgan Grenfell as a derivatives trader in 1987. He notes that “it closed down in a blaze of glory” when the market-making operations of the bank came to a halt in December 1988.
He recalls that he had the day off when his boss rang him at 7am to tell him to buy the paper and read the front page story: “Of course, the front page was that the firm was shutting, and that was how we found out. So during the next three weeks we wound the business down.
“Then I thought clearly job security on the sell side wasn’t quite what it was cracked up to be and so the buy side seemed much better,” he smiles.
“And fortunately I ended up getting a job at Lloyds Investment Management, as it was known then, to work on the UK side.”
Initially starting on the private client side, the manager notes it provided him with a good grounding as “you have to do everything”.
He then moved into the institutional side where he was working with small companies. The manager eventually ended up running the small-cap side of the business, taking control of the Hill Samuel business when Lloyds merged with TSB.
Having spent roughly a decade at Lloyds when Hill Samuel Asset Management was effectively subsumed into Scottish Widows Investment Partnership – and with a move to Scotland looking likely – Mr Custis moved to JPMorgan at the beginning of 1999 as a UK mid- and large-cap manager. “That got taken over, so there does seem to be a pattern here,” he jokes.
After five years at JPMorgan, where he recalls the traditional operation had changed under the much bigger combined business, he got the opportunity to take on a role at Lazard.
He smiles: “I came here in 2004 and it [my career path] then becomes quite ‘boring’ for the next 11 years. This is my longest job. Some people churn every three years but that’s never the way I viewed it.
“When I joined Lazard it had a similar feel to what JPMorgan had in 1999, with a focus on investment banking and asset management. The culture was very similar and we’ve [Lazard] managed to retain that entrepreneurial culture here. When you get too big you kind of lose something.”
During his career he has covered the spectrum of UK equities from small cap to large cap and it’s clear the UK is where he is happy to remain.
“I think I have an empathy with it because we’re in the UK,” he says. “But if you go back, UK equities was the place to be. More than 50 per cent of pension allocations used to be in UK equities – global equity growth hadn’t begun when I started out on my UK path.
“A lot of European investors looked at the UK as a separate allocation and it really was, to a certain extent, the centre of the universe. That has changed over time and so the challenges of a UK investor have changed with it.”
The manager points out that with the UK being probably the most international market, UK investors have to be cognisant of what is happening around the world. “You can’t look at it in a myopic way,” he adds.
However, the biggest challenge he’s encountered during the past 30 years is how investors have changed the way they invest.
Mr Custis recalls: “I remember I was doing small cap when sterling fell out of the exchange rate mechanism and there were clear implications for sterling weakening. But there was perhaps a six-month window where you could change your investments to reflect the changing nature of the relationship with sterling and the other currencies. Now it would be six minutes.
“Everything just happens so much faster; information gets disseminated quicker. A large part of it is that as pensions have allocated away from the UK and the old balanced portfolio has fragmented into a whole lot of specialist mandates, the people running the specialist mandates have a shorter time horizon in terms of how their performance is judged.
“I think that does lead to decisions being taken that much quicker on the basis they have to perform this month, or quarter, or year.”
He explains that he has had to adjust to the new environment and “try to look through some of the noise”.
“There is so much noise out there that trying to decipher what is relevant and what is not, and how we take that and use it to our clients’ advantage is going to get more challenging as we go forward,” he says.
In spite of it being his longest tenure, Mr Custis is keeping himself busy, with the fund consolidation that saw the Lazard UK Alpha vehicle merge into the UK Omega fund at the end of February “front and centre of my time at the moment”.
“This job is a roller-coaster of emotions –grumpy days and happy days. When a job is going well you always think it’s the best job in the world, and when it’s going terribly it’s the worst,” he laughs.
“You go through phases when you’re clearly in sync with the way the broader market is working and you’re consistently outperforming. Those are good times but they’re always going to be interspersed with bad times. The moment you start believing your own publicity, it’s the worst thing you can ever do.
“You enjoy the good times because you know the bad times are potentially round the corner. This is one of the few jobs where you go literally head to head with your competitors and at the end of the year there is a scorecard, and it’s black and white,” he adds.
“There are few jobs that list you so publicly on how you’ve ended up each year. From that regard, it’s how you cope with a bad year and how you cope with a good year. But you have to try and navigate your way through and have self belief that what you’re doing is ultimately the right thing.”
CV
Alan Custis
2004 – present
Head of UK equities and manager of Lazard UK Omega fund, Lazard Asset Management
1999 – 2004
UK mid- and large-cap manager, JPMorgan
1989 – 1998
Portfolio manager, small-cap team, Lloyds Investment Management (head of small caps at Hill Samuel post the merger of Lloyds and TSB in 1996)
1987 – 1988
Derivatives trader, Morgan Grenfell
