Speaking to InvestorDaily, Lazard AM chief investment officer Susan Roberts said her firm doesn’t focus on overweighting or underweighting sectors or stocks relative to the index.
“In terms of the universe of Australian equity fund managers out there, we are probably one of the most active fund managers in terms of the amount of difference we have from standard benchmarks,” said Ms Roberts.
But she acknowledged it can be hard to be a value manager when the going gets tough.
“That’s why people can make money being a value manager: because if it was easy, everyone would do it – and the returns from value investing would dissipate,” Ms Roberts said.
“But it is hard. You look silly from time to time,” she said.
Lazard AM portfolio manager and analyst Philipp Hofflin agreed, pointing out that career risk is another factor that has limited the number of value investors in Australia.
“It’s an uncomfortable investment style because the crowd’s constantly saying what you’re doing is wrong,” Mr Hofflin said.
“[Value investing] works because sometimes it doesn’t. If it always worked, I think everybody would be doing it,” he said.
But when it fails, value investing fails “spectacularly” – and “you fail on your own”, Mr Hofflin said.
“And everybody can tell you why you’re wrong. In 1999 [people told us] ‘You’ve missed the internet’,” he said.
In 2007, Mr Hofflin and his fellow portfolio manager Rob Osborn were constantly being told that they had ‘missed China’ and that iron ore prices would be high forever.
Despite Lazard AM’s strong track record, the firm did underperform in both the ‘tech boom’ and the recent ‘mining boom’, he added.
But clients who have stuck with Lazard AM through the troughs have done very well for themselves, Mr Hofflin said.
“The best clients are the clients that have been with you through a cycle,” he said.
