EuropeanMay 18 2015

‘Because we are different it means the debate is robust’

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

BlackRock’s European equity managers Alice Gaskell and Andreas Zoellinger began working together a number of years ago after Ms Gaskell sought more help in running the eurozone funds.

She recalls: “There was a stock we were talking about and no one else agreed with me on the team, except for Andreas. And I thought, there’s a guy I could work with.

“We started working together and it’s gone from strength to strength in that time. We built a really strong track record in the Euro Markets fund and then four or five years ago we were asked to think about how we would do the income product. And that’s gone very well.”

Their working relationship has stood the test of time, helped by the “clear process” they use for selecting stocks across all their funds, but also by their very different personalities.

“Every fund manager has a bias to what rings their bell and what kind of risk they want to take,” Ms Gaskell says. “Because we are quite different it means the debate is very robust and it also means that we’re probably seeing different things.

“I would say I’ve been somebody who likes change, looks for quite contrarian, value-oriented opportunities and really focuses on surprise – what’s surprising, why is it surprising and what does that tell us about what the risks are and how the world is changing?”

Mr Zoellinger admits he is “more steady, predictable”, in acknowledgment of his German heritage. “We are quite different but quite complementary,” he reveals. “That’s what we have found out from years of working together. It’s all about playing to the strengths and weaknesses of the other person, and realising what kind of market environment we’re in.”

He cites March 2009, when the market was “at a turning point”, as playing to Ms Gaskell’s strengths. “If it comes to keeping some stocks a little bit longer, not beyond fair value but upgrading numbers, I would maybe hold on to these stocks tentatively for a little bit longer. I like the predictability,” he says.

Ms Gaskell adds: “In the current environment, predictability has been driving markets, so stocks that are predictable are performing well, which is why the income fund has been doing so well.”

She compares it to the Italian equity market in 2011 when equities were extremely cheap as a result of the political risks at the time. “That was a once in a lifetime opportunity to buy Italian stocks when they were attractively valued and the risks were being mispriced,” she says.

“We’re not in that situation today because the market has recovered quite a long way and we need to think more about growth and predictable growth – what kind of growth we can count on and what kind of growth is more risky. In that environment, predictable stocks get along better as we saw last year.”

Looking back at where their respective interest in fund management came from sheds some light on why they have had success as a duo.

Mr Zoellinger remembers checking the price of an equity when he was as young as 12. He recalls: “The reason was that my dad worked for one of the large German industrial conglomerates. The only thing I understood was if the share price went up, that was good. So I started checking share prices without understanding what a share was. He tried to explain it to me, but it didn’t quite make sense.”

His interest had been piqued and when he finished school he did an apprenticeship with one of the large German banks. He found he enjoyed equity research and trading during his time in the different departments, and that was his route into the industry.

Mr Zoellinger studied business administration at university in Munich and then began applying for jobs, until he was accepted by Merrill Lynch Investment Managers, which merged with BlackRock in 2006.

“I felt it was time for a change and if you want to do banking or fund management in Europe – you either go to Frankfurt or to London, [which was] the much more exciting option,” he admits.

Ms Gaskell emphasises that she did not start examining shares as a child and instead studied classics at Oxford University, only to change her degree to politics and philosophy partway through.

She recalls: “I was always a very strong analyst and interested in what’s going on in the world, and looking at it from a different perspective I guess classics, politics and philosophy are quite diverse interests. My father was a pension fund manager, so I got a bit of contact with investment at that point in my life when I was trying to work out what to do.”

Ms Gaskell travelled fairly extensively with her parents as a child and an international role appealed to her. She secured an internship with Mercury Asset Management while at university and then worked for the company after graduating.

“The job was international, research based and also very competitive and I’d always been told I was too competitive,” she says. “When I did the job and met the people in the industry I just thought they were such exciting, interesting people.”

Mercury was subsequently taken over by Merrill Lynch, so she has effectively stayed at the same company for 21 years.

Both Ms Gaskell and Mr Zoellinger speak highly of BlackRock’s takeover of Merrill Lynch, combining the active equity skills it had acquired from Mercury with BlackRock’s own fixed income expertise.

She notes: “What you have now many years later is a business that really knows a lot about every part of active and passive management in equities and bonds and alternatives, with a huge technology core that allows us to understand what’s happening on a timely basis and manage the risks effectively.”

More recently, they have worked together to launch European income products, including the BlackRock Continental European Income fund and the BlackRock Global Funds European Equity Income fund.

Mr Zoellinger says that in 2009 and 2010 they received a number of requests from both inside and outside the business for an income product in response to the already low-yield environment.

Ms Gaskell adds: “BlackRock launched a lot of income [equity and alternative] products at around the same time because around five years ago you could really see the direction of travel in terms of fixed income markets and where yields were going.”

At the time there was a big market for equity income in the US and the UK, she points out. “But in Europe there wasn’t that kind of culture. People haven’t liked equities very much in Europe for most of my career.

“People particularly hated Europe around 2010-11, [which] was probably the bottom of the European equity market in terms of international appetite. So it was a great opportunity to bring [our] approach that has worked so well into another market, which was offering an enormous amount of yield and was very cheap. And if you could pick off the best stocks at that point it was a really good chance to kick off the product.”

Recent events in Europe, including the Greek election and the ongoing wrangling over its debts, as well as Mario Draghi’s foray into quantitative easing, mean the region remains in a period of uncertainty. But it seems the duo takes a great deal of enjoyment from investing in an area that is still unpopular with many investors.

Ms Gaskell says: “I think one of the things that has been working very well in the equity income strategy is that in a low-growth world where we have a bit of acceleration, then a bit of pullback – and where people are aware of the political risks – there are still cheap stocks around in the market. So in some ways you don’t want all the risks to disappear in Europe.”

As Mr Zoellinger concedes: “That would be very boring.”

Ellie Duncan is deputy features editor at Investment Adviser

CVs

Andreas Zoellinger

2011 – present

Portfolio manager, BFM Continental European Income fund, BlackRock

2010 – present

Portfolio manager, BGF European Equity Income fund, BlackRock

2008 – present

Portfolio manager, BGF Euro Markets fund, BlackRock

2001 – 2006

Graduate trainee, equity research analyst, Merrill Lynch Investment Management

Alice Gaskell

2011 – present

Portfolio manager, BFM Continental European Income fund, BlackRock

2010 – present

Portfolio manager, BGF European Equity Income fund, BlackRock

2003 – present

Portfolio manager of what was to become BGF Euro Markets fund, BlackRock

1997 – 2006

Portfolio manager European equities, Merrill Lynch Investment Management

1994 – 1997

Equity research analyst UK then European equity team, Mercury Asset Management