13 Questions for Man AHL CIO Russell Korgaonkar

In this series, we ask leading fund managers about everything from their investment strategy, to role models, their views on cryptocurrency, and what they’d never invest in

Marina Gerner 5 January, 2022 | 9:02AM
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In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal their views on cryptocurrency, and tell us what they'd never buy.

This time our interviewee is Russell Korgaonkar, chief investment officer of Man AHL. He oversees various funds, including the Morningstar 5-star rated Man AHL TargetRisk Fund.

Which Sector Provides The Biggest Investment Opportunity in 2022?

The central pillar of our investment philosophy is to not forecast returns. It’s very difficult, so we focus on managing risk instead. As a multi-asset systematic manager, we think of asset classes rather than sectors as investment opportunities. In the very long run, the asset classes in our portfolio tend to deliver similar levels of risk-adjusted returns, and whereas expected returns can be thought of as being relatively stable (though difficult to forecast), in our experience risk is both time varying and more predictable.  

What's The Biggest Economic Risk Today?

That’s more like it! But, again, the key to our approach is not to worry too much about the cause of the next risk event--it will always be different to the last one--but rather to systematically look for tell-tale signs in markets that risk levels are rising. That could be the direction of prices, the micro-movements of prices, or the correlation structure between markets. Similarly, an increase in stock correlations represents a reduction in market breadth or, equivalently, a loss of diversification potential, and can signal that there is heightened risk of an equity selloff.

Describe Your Investment Strategy

TargetRisk is a systematic, long-only multi-asset strategy that focuses on systematic risk management. It invests in around 50 markets across four asset classes spanning 20 countries to achieve true diversification, and targets balanced risk allocations to asset classes that can perform well at different times, and in different economic cycles. Using systematic risk overlays, it also aims to manage downside risk by detecting when risk levels are rising so we can act quickly to reduce exposure. Basically, it aims to grow client capital while also limiting the downside. 

Which Famous Investor Do You Admire?

Jim Simons. A prize-winning mathematician and code breaker, Simons set up the investment firm Renaissance Technologies in 1982 and employed programmers, mathematicians and physicists to build complex mathematical formulas to systematically invest in markets. He built a brilliant research team that has, in my opinion, produced truly exceptional alpha.  

Name Your Favourite "Forever Stock"

Fine wine. It improves with age, grows scarcer over time, and, if it all goes wrong you can drink it.

What Would You Never Invest In? 

Bad wine, for almost exactly the opposite reasons.

Growth or Value?

Neither. I think of both as risk factors.

Pension or Property?

Property. You can't live in your pension.

Cryptocurrency: Public Enemy or Pioneering Proposal?

The technology is here to stay, and will revolutionise banking. Investing in it is a bigger challenge. I read the other day that a cryptocurrency called "Omicron" rallied by 900% on news of the Covid variant with the same name. Go figure!

What Can Be Done To Increase Diversity In Fund Management?

Attitude first: diverse teams make for better teams--you cannot underestimate this. Secondly, planning: you need to plan to build diversity. It doesn’t happen overnight.

How Can Systematic Funds Apply ESG Principles?

The principles of responsible investing are not the sole preserve of discretionary traders. There is a tremendous amount of ESG data, but it is of varying quality and reliability. Systematic funds, which run on algorithms built using highly quantitative and scientific processes, can use computing power and quant expertise as an advantage here: sifting through reams of data to establish which companies and assets are genuinely able to satisfy ESG requirements.   

What's The Best Bit Of Advice You’ve Ever Been Given?

Never waste a good crisis.

What Would You Be If You Weren’t A Fund Manager?

Formula 1 driver. And if I didn’t have the talent to make it (which might be a possibility) then I’d turn my hand to professional golf. And then cycle through a whole list of fantasy pastimes before reluctantly settling on premier league footballer. Oh wait a minute…

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Marina Gerner  is a freelance journalist