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Monday, 15th April 2024
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Getting it right...risk and reward
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Dan O‚€ôDonovan takes us through a day of investment strategy, decisions and systems
.6.15 am The alarm is set for 6:15am which means I‚€ôm generally having breakfast by 7:00am. I take about 20 minutes over breakfast listening to non-intrusive radio, the less talk the better. During breakfast I like to read a short article from a magazine like History Today or National Geographic or maybe a book review to ease me into the day. If I arrive in the office after 7:45am I feel I‚€ôm late; on the way to work I will have listened to the news headlines.
First job of the day is to update myself on market news. CNBC is a superb television station for my purposes I tune into it first thing every morning, I also use a number of summary pages on the Bloomberg system to update me on the major markets. I flick through the newspapersfor interesting articles, which I should read later or bring to other peoples attention.

. 8.00am The first meeting of the day takes place. Joe Mottley, head of equity strategy, chairs a meeting where a number of analysts summarise key events over the last 24 hours in so far as they impact on the companies and sectors we invest in. A key feature of the way we in Setanta approach investment decisions is that we view the world as a collection of investment sectors rather than geographical regions so integrating news in one part of the world with investments held elsewhere is an important purpose of this meeting.

.8:20am Return to my office and follow up on any really interesting articles that I have spotted or have been drawn to my attention at our investment meeting. At around this time I check my e-mails for anything urgent, printing out copies of anything that requires an input from me and deleting those I need not respond to, or do not need for future purposes. If I‚€ôm away for a few days this can turn into a very tedious task.

.9:00am At around 9:00 I review the ‚€ėAction List‚€ô I have set for the day and begin to tackle issues as necessary. The fact of the matter is that frequently events overtake whatever ‚€ėagenda‚€ô I have. Over the past six months we have been installing an investment accounting and administration system and this has required an endless stream of ad-hoc meetings. It has proved even more complicated than I had expected, putting a lot of pressure on people‚€ôs time and testing our ability and our understanding of issues. We have employed a company of software consultants to direct the project and they have ensured that we have not lost momentum or direction. Our live date has only slipped by four days since we started and I‚€ôll be very happy if this is the eventual outcome. Our objective in putting in the system is to have a platform that will allow us develop our business across the three critical areas we have identified; our parent Canada Life Ireland‚€ôs requirements, third party party, including asset management, and IFSC opportunities. Hopefully that is what we will achieve.

.10.00am At least twice a week we have a formal investment strategy meeting where the topics being discussed can be quite varied. We like to keep the agenda short and the meetings to about an hour and a half. Papers for the meeting are circulated 24 hours in advance and taken as read. A typical meeting here focuses around a proposal to buy a particular stock.

The proposer summarises the arguments highlighting the drivers in the stocks future success and putting it into a sectoral context. We have a scoring system for evaluating equities and we look at this score in the context of its peer group. As we run a relatively concentrated portfolio, 100 stocks world-wide, we may also have to consider which stock it is replacing. Bonuses are highly geared to performance so we are all motivated to kill off the bad ideas and support good ones.

.12:00pm Talk to my personal assistant Maria Maher about any appointments I may have during the day, I also take the opportunity to respond to my mail or calls that may have come for me.

.12:45pm Go out and buy a sandwich which I eat at at my desk while looking at CNBC or Sky News. At this time I usually read the reports of the previous night‚€ôs soccer matches. I also use lunch hour as an opportunity to read through some stockbroker research.

.1.45pm Go out for a large espresso and a short walk.

.2:00pm Most days I meet with Paul McCarville, the marketing director, to discuss either a particular presentation we are making or progress on product development ideas. There are arguably three key areas for an asset management company to get right, investment performance, product range and client service. At the moment we are devoting a lot of time to the consideration of the products/investment vehicles that we offer. The creation of a single currency for a large part of Europe has generated a considerable debate among investment managers and pension fund trustees as to what now is the ‚€ėhome market‚€ô for pension assets within the different countries. How we view the answer to this question is an important determinant of the stable of products that we offer pension clients and indeed how we manage money. Part of Paul‚€ôs job is to maintain a liaison with pension fund intermediaries and feed back from these contacts is also an important input on how we respond to the investment needs of pension funds. What we have to guard against is distorting our investment process by the creation of a series of investment products that are nothing more than fads based on a misunderstanding of what long term investors require and of how markets operate.

.3.00pm At least once a day I have a meeting with our operations manager Dave Black to discuss general house keeping issues. Frequently the discussion will centre on the procedures and systems that we are using and how well they are functioning. Where for example a trade fails to settle on time Dave will establish where the fault lies, with us in Setanta, the settling custodian or our dealing counterparty. Where trades are large the overnight cost of being out of funds can be significant. As our compliance officer, Dave is not slow to tell me what he considers to be proper and acceptable procedure.

.3.30pm Meet Don Gallagher, chief executive of Canada Life Ireland, to discuss general group issues and report on developments within Setanta Asset Management. As an asset management company, funds under management is the key driver of our success and the interaction we have with both wings of the Canada Life sales force, the Broker Consultancy Division and the Financial Consultants Division is therefore critical for us. Once a week the executive of the Canada Life Group meets and the heads of the various subsidiary‚€ôs and divisions report on important developments in their area. This is an important forum for ensuring that the various activities of the group remain properly integrated and are being run to plan.

.4.00pm On average we meet one company a day that we invest in or are intending to invest in. Typically the CFO from the company will be accompanied by someone from investor relations and they will present on the finances and plans for the company. In the Tech Sector two companies that we have met over the last week are VNU and ESAT, examples of companies at different stages of their development. VNU is a well established highly efficient and competitive Dutch Telecom. While ESAT is at a far earlier stage of its development and looks to have an exciting future.The ESAT share price is of course highly volatile and as asset managers we always have to be sure that we are prepared to live with the consequences of this. This is the standard trade off between risk and reward or pain and gain.

.5.15pm Talk to Maria about any outstanding issues. For the last hour of the day. I attempt to clear outstanding issues on the agenda I set for myself the previous evening.

.6.15pm Very last job, draw up an action list for tomorrow. On the way home I go to the gym twice a week. This is a good way to avoid the traffic and energise me for the evening.

.8.00pm Arrive home and receive a severely highlights of my daughter Nuria‚€ôs day, if I am lucky.

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