What makes a top-class portfolio manager? We posed this question to Evli’s Senior Portfolio Manager Jani Kurppa, who is rated in the top 1% of Europe’s fund managers. Here’s what he said.
Evli’s Senior Portfolio Manager Jani Kurppa, along with his colleague Juhamatti Pukka, was selected as one of Europe’s top fund managers in Citywire’s EuroStars comparison. The coveted rating lists the top 250 fund managers across all asset classes and is drawn from Citywire’s database, which covers 16,500 names. Kurppa ranked 107th in the list.
We sat down to talk to him about what it takes to be a Portfolio Manager today, how the industry has changed over the past few years, and what keeps him going at Evli. We began by asking him if (and how) the Citywire rating has changed his work life.
Your ranking puts you in the top 0.6% of fund managers in Europe. Did the Citywire rating take you by surprise and do you expect it to have any bearing on your work?
It was certainly a surprise. While it doesn’t really affect my job, it is always nice to be recognised for the work you are doing. The metrics used look backwards, to what you have already achieved, whereas I prefer to look to the future and what can still be achieved. However, they do use risk-adjusted returns to benchmark different funds and portfolios. So when I see, for example, in the case of the Nordic Funds that the return has been very good, it gives me confidence in the sense that the portfolio construction and company selection has been successful.
From a company point of view, I think the ratings can only increase the trust in Evli from those based outside Finland. I also believe there has been positive feedback from clients after the publication, which is a good thing.
What would you say has been Evli’s role in shaping your growth as a portfolio manager?
The main factor, if I think about my work today, is that we are a big team. I have many colleagues who follow the same companies and markets. This means we can share ideas and discuss the companies. This, to me, is the most important thing in my work at Evli. Working with this team can give you different points of view and ideas. There are things you might not have necessarily thought about yourself which can arise as the result of working closely with colleagues you trust. However, in the end, you still have to make the decisions yourself and we are trusted to make the correct choices.
When it comes to the Nordic Bond Fund that I am managing, I’m given free space to operate within. I have been able to build a portfolio that I think is a good investment, as there is a high level of trust in your capabilities here. No one is telling you to buy a certain rating or sector.
How has the bond market changed during your time and has it had any influence on the portfolio manager’s way of working?
I think the actual portfolio manager work hasn’t really changed that much. The way in which we pick the bonds and companies, follow them and then construct a portfolio around them remains much the same as it did when I joined. What has changed is the IT and portfolio management systems. We are no longer running Excel sheets!
Also, how we trade the bonds is different. When I started it was still done on the phone but now, it is all done on Bloomberg chat windows and via electronic trading. Therefore, it has become a bit easier in that sense, but I think the basic work – following the companies and making the investment decisions and building portfolios – is pretty much the same as it was.
Perhaps, the only major change has been the integration of ESG analysis into the name selection process. This means that today we monitor ESG issues alongside the credit metrics.
The price reactions in the market, however, have become quicker and bigger. It now feels that the market reactions are more significant than they were 15 years ago. I think this is due to both a change in technology and mindset. It is now much easier to sell and people tend to react more to negative news than they used to.
In that context, what are the key skills a portfolio manager needs today to be successful? Any tips for the up and coming managers?
I believe the most important thing is to do your own work, your own analysis and make your own decisions. Do not just follow the markets, ratings or price movements, but instead be your own person.
A good principle that I have is that I only buy companies I would feel comfortable holding on to during the bad times as well. The simple fact of the matter is that markets are volatile. Sometimes they collapse and we can’t really predict the macro economy in the future, so sometimes there will be a downturn in the economy and therefore I try to avoid the trap of looking into fair weather companies.
You have been in this industry for over 20 years now. What drew you towards this industry to begin with and what keeps you going?
It wasn’t always my plan at any point, but I was interested in the equity markets when I was younger. It must have been around the mid-90s when it all started for me. Equity investments were like a hobby, even though I didn’t have much capital at the time. But I found it fun and my interest grew from there. By the time it came to choosing a university course I had decided that I would like to enter the industry. I enrolled in Accounting and Finance at the University of Turku and that is where it all began.
Initially, after my studies, I worked with derivatives, both equities and bonds. After that I moved into the bond market. My interest in corporate bonds developed much later. After the tech bubble in the equity markets burst, the bonds seemed different and maybe a little more complex. Once I started as a portfolio manager in corporate bonds is when I thought this was something I could do for a living. That was 2005 and here I am 15 years later still working in the same field.
It is of great interest to me to follow various businesses and try to get a good return on the investments. It is really fun to find value in something in the bond market.
What do you do in your free time to unwind and switch off?
It can be difficult to completely switch off due to the very nature of the job, and at some level, I am constantly thinking about companies in which I could invest. It can be particularly pronounced if there is something big happening in the market. In some ways, it can be more of a lifestyle than a job.
But like most Finns, I very much enjoy outdoor sports like cross-country skiing and orienteering - anything that gets me out into the Finnish countryside. However, due to the very mild winter we are experiencing in early 2020, there is less skiing and much more cross-country running. Other than that, it is all about family time!
Have you set yourself any targets for the future?
I don’t set any targets for the future. My main goal is to always continue managing as well as I possibly can. The Nordic bond fund is still quite young, at four years of age, and I want to develop it further to create a longer track record. Here, at Evli, I believe I am able to continue growing both as a person and a portfolio manager. It is a good environment in which to perform, both now and in the future.
Jani Kurppa, MSc (Econ), Senior Portfolio Manager Evli Nordic Corporate Bond fund. Jani has almost 20 years experience in the fixed income markets, specializing in corporate bond portfolio management. Jani joined Evli in 2008.
Interested in further reading? Read more about about how legacy helps in creating the next generation of portfolio managers here