Pictet's Lorenz Reinhard is one of the most successful fund managers in Switzerland.
Fifty-two-year-old Lorenz Reinhard and his team at Pictet Asset Management manage around CHF 5 billion spread over several investment funds specialising in Swiss equities. After taking over management of the Pictet Swiss Mid Small Cap Fund in 2003, Lorenz moved into the fast lane. To date, the fund has increased its value almost ten-fold and left the benchmark index trailing in its wake. That’s an achievement hardly any fund manager can match over the long term.
Throwing convictions overboard
Lorenz Reinhard describes himself as calm and stress resistant – someone who can cope really well with the hustle and bustle of the day. He says he's also conscientious and well organised, though, which is definitely important for a portfolio manager. But, he stresses, ”I’m not a know-all.” He says it’s essential for him to keep reflecting on investment decisions, even though they’re now often made in the team. And in doing so he’s willing to cast caution to the wind and throw convictions over-board. That's exactly what helps him earn money. “Otherwise there’s a danger of holding on to the wrong positions for too long, and that can cost a great deal of money.”
He likes to use the drive from his home in rural Esslingen in the canton of Zurich into the city of Zurich to do his thinking. It’s one of the few time slots in his day where there are hardly any external factors to influence his thoughts. When he's in the office, analysing information then takes up even more time. Rein-hard reads newspapers, broker reports, media releases and discusses news with his four-man team. The team then gather further information from discussions with company CEOs or CFOs. All that information is ultimately fed into Lorenz and his team's evaluation models.
And then presentations have to be prepared for the bank’s clients whose money is invested in the fund or who are interested in an investment.
They want to know how their investment has performed and why. Lorenz sums it up thus: “It's not a job where you shut up shop at five.”
The root of his success is a flair for numbers that he'd already developed in his school days. He went to primary school in Ostermundigen near Bern and then on to the Realgymnasium in Bern-Neufeld, followed by a banking apprenticeship at the Berner Kantonalbank, which he finished in 1988. He chose banking because, although he liked working with numbers, maths in its theoretical form was too abstract for him. “I was looking for a practical connection to numbers,” he says. He found it at the bank, and from there it was just a short step to the stock exchange and to capital investment. The world of stocks fascinated him enormously, he reveals.
Investing meant lots of research
After his apprenticeship, Lorenz worked at Berner Kantonalbank as an investment advisor for institutional clients, delving into the world of local Bernese companies to analyse their shares. These included large mountain railways, the Swiss Serum and Vaccine Institute and the technology company Comet.
At that time these companies rarely published key financial figures or annual accounts as we know them today. Anyone who wanted to invest had to do research before they could get an idea of a company’s financial situation.
And that was Lorenz's task, and one that he tackled with alacrity. After a while he decided to acquire the additional qualification of certified financial analyst from AZEK. He was awarded that diploma in 1993, one that is highly regarded in the industry.
Having completed this further training, he sought a broader sphere of activity and found it at Zürcher Kantonalbank. He worked in their analysis department until 1995, and became acquainted with the world of listed companies. He again covered Swiss equities, this time focusing on the food, retail and packaging sectors. But he left ZKB after just two years and moved to the private bank Julius Baer. This new role provided him with an international environment and lots of contact with foreign investors who were keen to invest in Switzerland.
At Julius Baer he then made the step from financial advisory analyst to fund manager, taking responsibility for his own portfolio. “I wanted to convert my investment ideas into funds myself,” says Lorenz. From 1997 to 2003 he managed funds specialising in Swiss equities with almost CHF 2 billion in assets. As the bank's investment philosophy at the time favoured technology shares, the bursting of the dotcom bubble was a defining experience for him. Investors had to be provided with explanations for the sudden turnaround in stock markets and for portfolio losses. Lorenz now sees this first financial crisis of his career as particularly instructive: “If things are going well, there's no guarantee that the good times will last,” he says.
This period also saw him change career. He concluded that the working environment for a fund manager would be better at an unlisted bank because he wouldn't have to fulfil short-term objectives dominated by quarterly financial results. And that’s what prompted his move to his current employer, Pictet Asset Management, in 2003.
His thinking was obviously correct – and after 17 years with the company Lorenz draws positive conclusions. He's been able to have a longer investment horizon because family-owned Pictet sets great store by having a long-term approach. And this has been vindicated by the success of the funds he manages. He’s been a team head at Pictet Asset Management since 2008 and is now one of the company's few equity partners, giving him a share of the company's profits.
Up to the Bernese Oberland to recharge his batteries
Away from work, spending a lot of time with his children gives him the opportunity to switch off mentally. Apart from that he likes sport, including playing tennis or skiing in winter. He enjoys travelling as well, but he's had to put his plans on hold in the current situation. “Getting to know new countries and regions is one of my passions,” he says. But every year he also returns to his former home around Bern for a few days. He believes that the area around the Eiger, Mönch and Jungfrau in the Bernese Oberland is the most beautiful part of Switzerland. It’s an area where he can recharge his batteries in just a few days.
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