If Graham Wainer had to sum up his investment strategy in one sentence it would be, “mean reversion lurks all the time in asset classes”.
It is a lesson learned over the 30 years he has spent in the industry. Seventeen of those were at GAM, from where Wainer joined Stonehage Fleming, just over a year ago, as chief executive and head of investments.
As the largest independently owned multi-family office in EMEA, with more than $12bn in assets under management, it is also a strategy that fits well with Stonehage Fleming’s focus on the intergenerational concerns of very wealthy families.
According to Wainer, both the Stonehage and Fleming parts of the business have always had families at their core, and the conversation has always extended to the children and grandchildren.
“It squares neatly with our investment time horizon. Our clients can invest in everything from bonds to private equity or longer-term unquoted investments that may take 15 or 20 years to come to fruition,” he says.
The other thing that attracted Wainer to Stonehage is the ability to have a much broader conversation than was possible at GAM. “When you operate in a pure asset management business, the focus is, and should be, on one thing,” he says.
“As a result, you cannot take a holistic view of what the client might need, be it from a tax or fiduciary point of view. The opportunity to have a broader, more comprehensive discussion with clients is very interesting.”
Such a conversation is important for the type of “grown-up, serious, long-term investing” that he believes is necessary in the current market environment.
“In around 2000 or even 1995, a nominal return of 7% or 8% was readily achievable from a portfolio of fixed income, some high-quality credit and a little bit of equity,” he says. “As time has gone by, two things have happened. First, the mix of assets required to achieve that level of growth has become much broader and requires a larger equity portion. Second, because this sort of asset allocation brings with it additional volatility, you now have to extend your time horizon.
“The key message we are giving to clients is that we can still produce the types of nominal and real returns to which they have been accustomed historically, but they need a longer time horizon and they must be able to live with the volatility.”