Cheap is the fund industry’s current motto, Katia Coudray tells finews.ch in an interview. The head of SYZ Asset Management reveals why the cheap approach can be dangerous, and what Winston Churchill and vintage wine have to do with her appointment.

Katia Coudray, SYZ launched an image campaign in February featuring Albert Einstein, Winston Churchill and Salvador Dali. Of those three, who do you most identify with?

Winston Churchill’s Slogan was «in conviction we trust». That fits nicely with asset management as we understand it. We run stock portfolios with just 30 positions, so we have to be absolutely convinced of each stock. And active management can’t be successful without talent – Dali stands for that.

SYZ also claims to «create performance». What about the asset management activities, which you lead?

In multi-assets, where we offer three strategies, we returned between 3 and 5.5 percent return for our clients. We returned 5 percent more than the benchmark in European stocks, and roughly 8 percent for bonds. We see ample investment opportunities despite the difficult market environment.

«Computer-based systems help us avoid periods of losses»

Your competitors seem to be struggling. What are you doing differently?

We’ve made large investments into our risk management in the last 18 months. Computer-based systems help us avoid periods of losses. This helped us in difficult times like last January and the Brexit vote.

What about client assets, have you had more inflows or outflows?

We’ve had outflows of several 100 million Swiss francs in our fund business this year. We can’t entirely escape the trend which has hit our industry. On revenue, it looks as though SYZ Group will end the year profitably.

«We are willing to invest in building our talent»

SYZ said 2016 was going to be a year of consolidation. Nevertheless, SYZ Asset Management hired various specialists. Are you still in the market for talent?

We reinforced our multi-asset team with three experienced fund managers and hired two quant specialists. Markets are growing increasingly difficult, and we need additional expertise to keep pace with them. We are also willing to invest in building our talent.

Does that mean your people are getting on-the-job training?

We just had two very good trainees. It’s extremely important to look out for young talent. We have an advantage in Switzerland, where we have excellent educational opportunities. The quality of university graduates is really quite high here.

You don’t just have Swiss employees, you also have teams in London and Edinburgh. Are these jobs in danger in the medium-term following the Brexit vote?

London is our distribution hub for all of Europe, and market access will certainly be a central point in the Brexit negotiations. One option is to build out the existing branch in Luxembourg in order to secure an EU passport. We will keep monitoring the situation in our industry very closely.

«Switzerland urgently needs market access to clients in the EU»

Asset managers in Switzerland are waiting for simplified market access to the EU. Geneva in particular, where SYZ is based, has struggled with the lack of European clientele, and private banker Yves Mirabaud recently outlined the decline of Geneva's financial center in bleak tones. Is this much pessimism appropriate?

I recently met with leading asset managers from around Europe. We all have similar problems: margins are under pressure and the competition from passive investments has increased dramatically. This shows that the industry is going through a difficult time – not just in Switzerland. But I would agree with Yves Mirabaud: Switzerland urgently needs market access to clients in the EU.

So SYZ Asset Management hasn’t escaped this trend towards passive products either?

Unfortunately, many end users have lost sight of the quality of funds and are instead focusing on the most affordable option. Cheap: this motto completely dominates our business right now. I still believe that the flight towards passive funds will come home to roost in several years.

In what way?

Markets aren’t going to keep climbing year after year. How can this be compensated for, when tracking the market directly? Investors will probably be prepared to pay more to generate alpha in a low-growth environment.

Most active managers don't manage to beat the market.

Do they? Or are they merely pretending to be active, even if they aren't?

«Our research team allows us to identify undervalued and interesting companies»

Aren't they active at all?

I'm simply asking myself this question. We have decided to withdraw from the benchmark in certain segments and thus from the market. Our research team allows us to identify undervalued and interesting companies and to invest in them.

More and more active managers are waving goodbye to independence – as for instance Janus Capital and Handerson or Pioneer. Is SYZ Asset Management going to take part in the consolidation?

Consolidation will continue. SYZ Group is generating valuable synergies thanks to asset management – a divestment therefore isn't on the cards. Conversely, I remain sceptic about acquisitions, because prices are still very high. We are therefore more interested in individual experts.

«I'm looking for quality outside the mainstream»

With all the challenges that you're juggling at work – how are you managing to find a balance in private?

I receive a lot of support from my family. But of course it helps that asset management is my passion. Work always means pleasure to me.

Is work your only passion?

I love wine. I'm from the Valais and would have loved to become a winemaker. My father said that this wasn't a profession for a girl. So, I go to wine tastings and on my travels I discover vineyards that are less well known. That's how this passion is similar to asset management: I'm looking for quality outside the mainstream.

Katia Coudray (47) has been chief executive officer of SYZ Asset Management since June 2015. She's responsible for a team of 100 employees and 17 billion francs in assets under management.

Coudray joined Geneva-based SYZ in 2011 as head of product development and went to take charge of investments. Previously she worked in managing positions at Union Bancaire Privée (UBP) and Banque Edouard Constant (today's EFG). The bank manager is a mother of two girls and lives in Tannay (VD).