Top returns in absence of virtue-signalling
Rising above the “performance culture” that permeates throughout the ESG investment landscape and focusing on results-driven delivery for clients has earned Nathan Hughes, Portfolio Manager of the Perpetual ESG Australian Share Fund, his Star Managers badge for 2023.
Beginning his funds management career as an analyst on Perpetual’s trading desk, Hughes rose through the ranks before taking on the environmental, social and governance (ESG)-centric fund in 2019, managing it through periods of volatility and coming out the other side delivering 3-year returns of 17.87 per cent.
“I’m very proud and grateful for the recognition. It’s pleasing to be recognised after generating what we think is pretty good performance through a tricky time,” Hughes told Financial Newswire.
“I was always interested in the market, and I love picking stocks and investing. Before I came to Perpetual, I worked in a chartered accountancy firm, but I was far more interested in my clients’ stock portfolios they owned and how they were performing. That’s what gave me the bug.”
Hughes said the “unmatched longevity” Perpetual brings to the Australian funds management market is embodied in its core fundamentals and philosophy that have withstood the highs and lows of investment cycles – and have now contributed to a Star Managers recognition.
But the ESG fund elevates Perpetual’s traditional investment style with new lenses and criteria to consider, ensuring stocks are selected to achieve certain goals and optimise risk and reward.
“I think there is always a concern that if you were to invest in a certain way you might be sacrificing your potential return. We believe that the combination of our ESG screening process and our core investment process means that doesn’t have to be the case,” Hughes said.
“We’ve been able to prove that. I’m really pleased that the fund has generated really good performance in a period when resources have been quite strong, which is normally a headwind in the way we screen.
“This fund has been operating for over two decades and I think the long-term performance, albeit through cycles within that, demonstrates that you don’t have to sacrifice return if you want to invest in a particular way.”
In a similar trend to the other Star Managers for this year, Hughes also said he was “incredibly lucky” to have a high-calibre team of “experienced portfolio managers and strong, experienced and talented researchers” in his surroundings, without which “he wouldn’t be doing as well as I am right now”.
This team effort and support is also hugely important for more personal reasons to portfolio managers like Hughes, who battle with several mental and emotional challenges dealing with markets on the daily.
“I think [you need to have] an ability to manage emotion because a lot of markets are driven by human psychology, and we face those same challenges. Trying to be aware of your biases and remaining as level-headed as you possibly can is important.
“[You need to have] an ability to work with your analysts and understand the quirks of each individual which can affect the stocks they recommend. You have to work quite closely with the team and be quite receptive to feedback.
“[You need to have] the ability to be decisive. At times the facts change or there might be an opportunity and you must act quickly without having the full picture. Investing is inherently probabilistic, there’s no such thing as certainty in markets and at times you need to just decide.
“Be confident in the decision-making process and the people working with you. Acknowledge that despite your best efforts not everything will work out but have the confidence to keep going. A lot of the challenges where the PM comes in is mental.”
Celebrate the achievements of the 2023 Star Managers and broader Fund Manager of the Year awards finalists with us at our gala dinner on Thursday 14 September from 6pm at the Four Seasons Hotel, Sydney. Tickets are on sale now and you can find more information about the awards and event here.
From Perpetual’s website:
August 10, 2023. We previously reported that we had experienced an extended outage as a result of an IT security incident on a system provided by a third-party provider to some of Perpetual’s funds. The third-party provides unit registry and administration services to Perpetual’s Asset Management and Wealth Management divisions’ investment funds, WealthFocus and Select products.
Core systems have now been restored and processing client transactions and payment of withdrawals continues, however access to myPerpetual remains impacted. We are continuing to work on restoring it as soon as possible and we sincerely apologise for the inconvenience this has caused.There is no impact to Perpetual’s listed products, institutional mandates, Pendal, Perpetual Corporate Trust, Perpetual Wrap clients or any of our international asset management businesses. Importantly, there is no impact to any Perpetual client investments, or our own systems, which remain safe and secure.Our current assessment has identified that sensitive client data remains secure and encrypted. Unfortunately, a limited amount of personal information has been compromised. Given the ongoing and increasing threat of cyber security events, we are proactively informing all of our clients. Please visit our dedicated webpage for more information.As a result of the extended outage there may be some delays associated with our usual end of financial year processes, including fund reporting, distribution statements and payments. We will work through these as quickly as possible and we sincerely apologise for any inconvenience this may cause.