Fund manager’s diversity moves reflect shifting sustainability drivers in investment
Laurent Ramsey is Managing Partner and CEO at Pictet Asset Management
This interview was published in Responsible Investor in its Leaders interviews series, on 26 November 2019.
In conversation, Ramsey – who joined the firm as an intern – is quick to point out that this is what he sees as the key merit of a partnership structure: being able to take the long view.
“When you are private, time is on your side. We don’t have any pressure to deliver quarterly returns, which means that employees don’t have to worry about distractions. If you have a high level of conviction that something is right for your clients, you can design it and stick with it until you get it right.”
The release of short-term pressure meant that the protective bulwark of partner equity helped Pictet to maintain employee headcount in the wake of the 2007 financial crash.
But for all the benefits of a partnership – Ramsey says he can’t imagine working in another structure – one shortcoming is evident: diversity. All the partners in Pictet’s 214-year history have been men; an unenviable record even amongst its peers. Partner-led rivals Lombard Odier and Mirabaud have both appointed women as Partners.
But Ramsey may have already put into motion events which could up-end the status quo. Since he took the helm in 2015, Pictet has made a concerted push to improve representation – particularly across socioeconomic classes.
Most interesting is its joint programme with London-based charity Sponsors for Educational Opportunity (SEO), now entering its third year, a relationship Ramsey calls “very, very gratifying”. SEO offers ethnic minorities and those from disadvantaged economic backgrounds “life changing” placements at investment banks, tech firms, engineering companies and other elite employers.
To date, it has facilitated more than 5,000 internships. The scheme bills itself as a way to get a foot in the door and can often lead to further graduate positions and full time positions. The programme got its start when an SEO alumnus, now a Singapore-based Pictet executive, proposed the charity as a partner to the firm’s diversity and inclusion committee, chaired by Ramsey.
Founder and CEO Andrew Fairbairn, a former UBS and Deutsche banker, speaks effusively of the burgeoning partnership: “They started off with four or five summer interns but then it was clear that their appetite was actually quite a bit bigger and all of a sudden they were hosting 26 placements which was far above the average for an asset manager. Those numbers were astounding, and Pictet wouldn’t be considered a particularly large firm either,” he said.
Fairburn’s optimism for the programme, he says, is also due to the firm’s willingness to adapt: “It’s very exciting to see how they have responded as an organization. There’s been very apparent learning on their part about how to work with young people coming from disadvantaged backgrounds, where they can fit into the organization and how they need to be supported.
“We hope that once the kinks are worked out of the system we can take the model and approach the private bank and other arms of Pictet.”
According to Ramsey, different ways of thinking is an analytical advantage for the firm: “Their diverse backgrounds allows for diverse approaches and that, I think, is what makes them stronger.”
The firm has made other pledges to diversity. Alongside five other founding members, it committed this year to the UK-based City Hive initiative which aims to address gender pay disparity within the asset management sector and to connect employers with diverse candidates.
But Pictet is also eyeing more immediate opportunities to generate investment insight from diversity. The firm recently inked an agreement with EMpower, an international grant making organisation supporting local NGOs in emerging markets to improve the lives of “at-risk” young people.
In exchange for financial support, the charity will provide ground-level insight gathered by its networks which will then be folded into the ESG analysis for Pictet’s new Sustainable Emerging Debt Blend fund. Perspectives gained will also inform “discussions with policy-making institutions and central banks” who have the power to influence policies that affect human capital development.
To Andrew Fairbairn, SEO London boss, diversity seems very much an executive priority for the firm: “Laurent and I have had a number offline discussions about the program and his commitment to it. This doesn’t happen at every firm. A lot of times it’s the junior HR recruiter who is just cycling through the diversity and inclusion function. To have the partner of one of the biggest brands in continental Europe speaking to you is a big deal. I’m not quite sure what’s behind this push but Laurent was made partner around that time [when the partnership with Pictet AM began]. I have to presume that he was looking to make some changes and somewhere in his own formation was a view that this is an important place to start.”
Over the last two decades, Pictet has focused some of its investment funds on ‘megatrends’, a term for the thematic, structural changes shaping and reshaping society, such as clean energy, biotech and robotics. Pictet estimates that its strategies take six-and-a-half years on average from conception to reach a billion-dollar valuation, considered the threshold for self-sufficiency.
Ramsey cautions against using competitive products or current client demands as bellwethers because “one runs the risk of always fighting the battle of yesterday and not being able to future-proof one’s products”.
Describing the beginnings of Pictet’s storied 20-year-old water strategy – which stills ranks in the top tier of thematic strategies – Ramsey remembers a time when “all anyone wanted to talk about was technology”.
The second component of the firm’s approach to thematic investing is a systematic, internal architecture.
Each stand-alone thematic strategy is run by a team of specialist portfolio managers, described as manager-analyst hybrids, and an independent advisory board of external practitioners and academics which tracks the evolution of each theme and ensures its continuing relevance.
What’s good for investment research is good for the firm itself, of course.
Laurent Ramsey’s push on broad diversity at Pictet aims to help it produce long-term, sustainable performance.
© 2019, Responsible Investor