InvestmentsNov 3 2014

‘People’s experience of investing in resources tough’

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“There are very different drivers on the sell side. You’re looking to generate turnover; you’re looking to engender flows in companies. As I saw this push to go more and more into analysing companies that I wasn’t formally covering, I thought it was a natural progression to go across to the buy side and actually be paid to investigate and then buy the right companies.”

But he emphasises the whole process of shifting from selling to buying took place across 18 months and, as he puts it, he had “very strict criteria”.

Mr Goodwin says: “I wanted to work in a company where it was small enough that performance mattered, so what I did actually affected the bottom line – that was quite key.

“Having worked at Shell and Citigroup and Merrill Lynch, which are very big corporate organisations, it was nice to move to a smaller organisation where your impact is much more direct. But at the same time I think, and have thought from day one, that there are some principles to investing successfully in resources.”

He believes that the investment process in resources needs to be a bottom-up, stock-specific approach, rather than the macro approach that many might associate with resources investing.

“I wanted to work in a company where research and investment in understanding companies was very important, rather than being a solely top-down, macro-based approach,” he suggests. “The other aspect to resources is that you need to look at resources on a global basis. I needed to have access to people who were looking at Chinese companies, Asian companies, as well as European and North American companies – it had to be a global remit.

“Finally, I wanted to work in a firm where portfolios were very concentrated. The move across to Martin Currie ticked all of those boxes.”

Mr Goodwin wanted to go into his new role as a portfolio manager with direct responsibility for running investment portfolios. In the end, he believes it was a relatively smooth transition. And those same core principles were behind his decision to take his current role at Barings, too.

He reiterates: “It was a very proactive decision to come to Barings, based around the fact there is big investment here in research and there is a very structured way of looking at a company.

“Clearly, Barings is a global house. On the equities side the core principles are running high-conviction, concentrated portfolios, which again fitted with the way that I like to approach investing in resources.”