And while Jacob de Tusch-Lec, manager of the highly successful £337.8m Artemis Global Income fund, would naturally argue that the key to consistent outperformance is the result of his skill as a manager, his life has certainly benefited from a bit of luck.
At 26, the loan-laden New York University business school student was spending his days applying for every internship available for the months between his first and second year – pivotal for finding a job after graduation.
With the rapidly deflating tech bubble nearly wiping out the internship options in New York, Mr de Tusch-Lec turned his attention to London.
But on the day he was accepted onto an internship at Merrill Lynch in London, hijacked aeroplanes crashed into the World Trade Center in New York. It was September 11, 2001.
Among the casualties were numerous fellow students of his at NYU, which was the closest business school to the attacks. Mr de Tusch-Lec described how the city had a “weird atmosphere” in the year following the attacks.
Another fallout from the tragedy was that what few internship openings were left were scrapped. Merrill Lynch’s New York office was lost in the Twin Towers disaster. However, Mr de Tusch-Lec’s decision to apply in London meant he retained his internship that, a year later, led to a permanent job offer.
Luck certainly had a role in Mr de Tusch-Lec’s early years in finance.
At Merrill Lynch, Mr de Tusch-Lec worked as a macro analyst and met two fellow analysts with a passion for quantitative asset management. They were Philip Wolstencroft and Peter Saacke and in 2005 he joined them at Artemis Fund Managers to help work on its quantitative range of funds under the ‘SmartGarp’ system.
His experience on the SmartGarp funds, which uses a quantitative platform set up to remove the mistakes introduced by the biases of human managers, played a crucial role in the way Mr de Tusch-Lec set up and manages his current fund, the Artemis Global Income fund.
He still maintains that the quantitative system “works most of the time” but it suffered spectacularly during the financial crisis, losing significantly more money than the overall market.
“What that has taught me, [through] the struggles we had with quant back then, was not so much that quant does not work but the importance of being flexible and opportunistic,” he says.
However, his grounding in the quantitative system has been a huge influence on how he views the market.
He explains: “Quant is great because the machine tells you what to do. That is the attraction about it, because we all know in the end we are just small monkeys and we all know the studies that say when we are hungry and blood sugar is low we don’t make great decisions or that dopamine gets released when we see green on the screen and we want to buy.”
So what he has tried to do is take the positives from the quantitative system – its focus on ignoring emotional decision-making, blocking out the noise of the market and making rational decisions – but then doing what no quantitative system can do: make gut decisions.
The manager adds: “The problem with quant is that it does not have that gut feel and paranoia that you feel as a person. And I’ve also learnt that you can have a framework that, on the surface, seems 100 per cent intellectually waterproof and rational but the world is not always rational and there are things happening that you can’t allow for.
“So when we were putting together this fund I was very careful that the declaration on the tin was not too prescriptive and tight.”
Yet he says he still takes a “focused approach to not be emotional about it and not be too story driven”.
The desire not to be “story driven” is eminently sensible, but is odd coming from Mr de Tusch-Lec, who professes to love equity investing precisely because of the stories behind the stocks.
His passion for equities seems boundless. “It is a way of expressing a view about the world”, he says, adding that he loves equities because it is not dominated by the structured and technical nature of other asset classes such as fixed income.
He says: “Equities is the asset class driven most by a view of what the future will look like; what the world will look like.”
It is no surprise then that Mr de Tusch-Lec bought his first shares when he was just 13 in his favourite football team Brøndby when it launched its initial public offering. By 15 he was writing school essays describing how he would love to be an equity analyst when he grew up.
He is now running the Artemis Global Income fund, which is the top fund in the IMA Global Equity Income sector in the past year and second best in three years. He has seemingly dedicated his life to it – he professes to have no hobbies, instead always reading company reports or the news or taking care of his young children.
This is a man in love with his job, but seemingly not yet consumed by it. That said, he seems to question everything and is acutely aware of the failings of humans. He cites study after study that displays the brain’s easy susceptibility to outside influence or manipulation.
He uses an example of his stock selection to explain how he views investing. At one point Mr de Tusch-Lec had 10 per cent of his fund in Scandinavian equities. “I thought [to myself], is this just because I speak the languages and have good networks there?” he says. After reviewing the holdings he reaffirmed that it was just the right time to be invested in the region, but he felt it was important to “actually identify it is a conscious decision and not [based on] my inclination”.
His former teacher at New York University was Nouriel Roubini – Mr de Tusch-Lec was nicknamed mini-Roubini back then for his likeness to the renowned economist – who, for quite some time, was ignored and even mocked when he questioned the overreliance of the Western world on credit in the mid-2000s.
He was using the examples of Argentina and the Asian crisis to show that the US could be about to face the same problems. But US and Western commentators could not see past their own biases to realise what happened in Argentina could also happen in the US, until it was too late.
Mr de Tusch-Lec admits he learnt the value of consistency from Mr Roubini, but it’s his quantitative background that really taught him that “you want to always question everything you do”.
“It is worth knowing that we are much less in control than we think we are.”
CV
JACOB
DE TUSCH-LEC
November 2005 – present
Partner, senior fund manager Artemis Investment Management
2010 – present
Fund manager, Artemis Global Equity Income fund
2005 – 10
Fund manager, Artemis Capital fund, a £1bn open-ended unit trust investing in UK-listed companies
September 2002 – November 2005
European equity strategist, equity research and economics, Merrill Lynch
2000 – 02
New York University, Stern School of Business, MBA, Finance
1998 – 2000
BankInvest
June 1993
University of Copenhagen,
BA and MSc in Economics
