Selecting the right investments
Work With Purpose
“If I'm going to work every day, I should do something meaningful.” Sounds reasonable, doesn't it? In most cases it is - with one exception: if you invest, you should act differently.
Investor George Soros* already recognized this when he criticized this behavior in his friend Byron Wien. He added: “But you go to work and you do something every day and you don’t realize when it’s a special day.” Soros’ point of view, in fact, was to go to work only when it made sense. On those days, he actually did something.
By the way, I do not write the Gutmann Viewpoint only on special days, because the power of some things lies in their regularity. It is different with the investment of money, George Soros certainly had a point. His fortune in billions confirms it.
The journey is not the goal
An investment team should resemble studying monks and nuns in a monastery. Knowledge is accumulated in silence; you hear a pin drop in the reading room and one day seems no different from another. Only rarely does movement enter. Namely, when reading and studying makes an action inevitable. A new stock absolutely must be added to the portfolio or an existing one is no longer acceptable and sold.
When you entrust your assets to a professional asset manager, you want to get something for your money. That is only too understandable. Yet it is only the result over time that matters, not the activity along the way. On the contrary, too much action is a burden. This is because frequent buying and selling incurs costs - be it trading spreads in the market (the so-called bid-ask) or transaction costs.
Our way of doing it
The Gutmann equities team recognized this years ago and has turned all the screws to make fund management even more efficient for you. Changes in the portfolio are carried out with sophisticated computer support (for those who want to know exactly: we use algos and pre-trade analyses), with the lowest possible fees. In addition, inflows or outflows of the fund are considered to steer the allocation in the desired direction.
In bonds, too, the best costs are those that do not arise in the first place. The Gutmann bond team has been deeply involved in the primary market for many years. This is the name given to new bond issues. Over 2022, we subscribed to 230 new bonds for our bond funds - a significant number.
Why is this particularly advantageous for you, dear customers? The bid-ask spread is avoided at the time of subscription and there are no transaction fees. In addition, we collect the new issue premium from the bond providers. What is this? Because companies are keen to place their debt, in most cases there are particularly attractive yields trading above secondary market levels.
Understanding means trusting
Selecting the right investments is Gutmann's top priority, but there is much more to professional asset management. There are many small cogs that we turn, but they are not always visible from the outside.
That is why it is important to me to give you regular insights into the engine room of our bank with the Gutmann Viewpoint. The better you understand our decisions, the more you can trust our expertise.
* George Soros (born 1930) is a Hungarian-American investor and philanthropist. He rose to prominence in the 1990s when his Global Macro fund bet against the British pound and made over $1 billion in profits during the 1992 currency crisis.
His friend Byron Wien (born 1933) is an American investor. He was chief strategist of the U.S. investment house Morgan Stanley for 21 years. Wien co-wrote the book "Soros on Soros - Staying Ahead of the Curve" with George Soros.