Good Design Is Beautiful And Functional

My Pulcina espresso maker brews good coffee. That’s precisely its function. It sits in the middle of the living room, where I spend most of my time at home. Hence its other defining trait: it looks good. 

It was created by designer, architect and artist Michele De Lucchi. His espresso maker strikes an irresistible balance of modern and timeless. 

As investors, we can learn from gifted creators like De Lucchi. After all, we are the designers and architects of our own portfolios. In fact, I recall moments when I described a portfolio as beautiful. The beauty lay in precisely meeting the client's wishes while simultaneously fulfilling my own standards of professionalism.

Exclusive and clear

At times I think Gutmann is the most exclusive club in town. Our clients are intelligent and successful. An excellent mix which can however pose its own challenges. The aptitude to handle complexity tempts one to seek it. Holding quality stocks and bonds for the long run often does not sufficiently stimulate intellectual curiosity. This is why structures are created around hedge funds, private equity, real estate, CAT bonds and derivatives. This not only increases complexity, but also the level of fees, like layers of a New York pastrami sandwich. 

I spent 10 years in the hedge fund industry myself. When I started in the 1990s, I had to pick 50 funds out of a global 100. When I left, it was still 50, but chosen from thousands. This change in probability had a negative impact on the potential returns. 

Deliberate omission

Gutmann's portfolio management focuses on top-quality equities and bonds. For equities, we focus on companies with a strong market position, competent management and promising services and products. For bonds, what matters to us is getting back the money that was lent. We spread our investments across many issuers in different sectors. We deliberately leave out certain areas - real estate for instance. We have no exposure there, neither in equities nor in bonds.

This courage to leave gaps is often underestimated. It's not just what we do that counts. It also matters what we don't do. So that our clients can sleep soundly. And so can we.