Ian Heath spoke to executive chairman Mark Clubb, Jason Jones, head of fixed interest, and JCAP co-founder Jerry O’Keeffe about their plans for a company from ‘little old Jersey’ to make its mark on the international scene
When you speak to TEAM plc executive chairman Mark Clubb, one thing is very clear – he wants the company to be something different.
After an impressive career in the City of London, Mr Clubb, now 60 years old, has returned home to Jersey to do what he knows best, which is build a business.
Clear on his objectives for TEAM plc, whose slogan is ‘Real World Investing’, he used a football analogy to set out what he wants them to be.
‘It’s like an under-tens’ football match, where every player is chasing the ball and they’re all clumped together,’ he said.
‘Nobody is sitting out there on the wing, waiting patiently for the ball to come to them and where they would have a relatively free run on goal. I think there is a place in the world for that kid out on the wing.
‘We’re trying to do something different. If you’re a responsible investor, or an investor accountable to others – for example, a trust company – you have a duty to demonstrate that you are managing the trust money in a responsible and diversified way, and we offer that.
‘We are trying to be that kid on the wing. TEAM’s multi-asset strategy range, managed by Craig Farley, is a good example of this. Our working assumption is that the financial-market landscape over the next 30 years is very unlikely to resemble the past 30 years, with some extremely important implications for portfolio positioning. To prepare for that future, we have made several bold calls:
‘First, we believe conventional government bonds offer return-free risk, and as such, we will not own them for our clients. Second, we have significantly enhanced our allocation menu to access more sources of potential return. Third, alternative income streams and real assets (including gold, oil, agricultural commodities, infrastructure, property, real estate and crypto-currency) play a very important role in our portfolio.
‘Finally, our multi-asset strategies seek to carry significantly less equity risk through cycles than benchmark reference points and our peer group, delivering genuine diversification for our clients.’
He said that as well as its different outlook on investing, a cornerstone of TEAM plc’s business was that its research and investment decisions were made in Jersey.
‘With the secular trends we have identified we’re not reinventing the wheel and we’re not being overly clever,’ he said.
‘Investing is actually very simple. It’s just not easy. We have strong conviction in what we’re doing and we exercise in-depth research. We’re unusual for Jersey, in that our research is done here and not outsourced to London.’
Mr Clubb explained that one of the issues that was key to TEAM was ensuring good cash management as part of its offering, hence the purchase of JCAP.
‘One of the things we’re trying to address as a business is that people don’t think of cash as an investment, particularly in the world that we live in today where we’ve got very little interest rate return,’ he said.
‘But cash is an asset. One of the reasons we bought JCAP was that it has long experience in dealing with cash. The whole investment story starts with cash and sometimes it ends with cash.
‘JCAP has a long track record of managing and advising on people’s cash strategies and we felt they would help our clients complete the journey from cash, through to making investments, through to cash again.
‘What people need to remember is that there is a duty of care when looking after others’ cash, even though it might not be making much of a return these days.’
Mr O’Keeffe explained that he felt TEAM’s cash management services offered the diversity that clients needed to meet fiduciary responsibilities.
‘Some of the bigger fiduciaries and trust companies have an internal team to manage cash but a lot of people aren’t big enough to afford to, so they outsource cash management,’ he said.
‘Managing cash, as opposed to leaving it in a bank account doing nothing, which is what a lot of people do, can improve returns quite considerably.
‘The way we have always managed cash is to have great relationships with lots of banks and we constantly strive to help clients understand the risks inherent in leaving cash in just one bank.
‘There’s a fiduciary responsibility to manage cash correctly for clients and leaving all of your money with one bank isn’t active cash management.’
He added: ‘We always advocate a diversification of risk, even if there is a short-term reduction in overall returns. The relatively recent events of 2008 and 2009 proved that banks can and do go bust.
‘Some people learned lessons from that, but some haven’t. If you can combine diversification of risk along with earning an enhanced return, then you’re doing your job correctly.
‘And that’s the message that we’ve always tried to get out to the market. You should be looking at cash as an asset; you should be actively managing cash to ensure that you are acting with the highest level of responsibility for your clients.’
Mr Jones, who oversees TEAM’s bond offering, said that an increasingly important sector for him was Environmental, Social and Governance investing, known as ESG – a field where his team has had success at a global level.
‘We started running a bond fund about six years ago and over the last three years we have moved it more towards ever greater levels of ESG compliance. Firstly, because doing so is the responsible thing to do, but secondly, because it drives investment returns,’ he said.
‘There are approximately 3,000 in our investable universe, from which we select our fund holdings. If you strip out the oil companies, the arms manufacturers and anything else that is viewed negatively from an ESG perspective by investors with a modern approach, you end up with around 2,000 bonds.
‘That’s the first stage of ESG – stripping out the stuff you don’t want to buy. You then start to conduct further research into companies and incorporate bonds from companies that are making a positive ESG contribution, whether because of their environmental practices, through exemplary governance or the social impact of their activities.
‘We have developed a process over the last three years that’s enabled us to be in the top 3% global ranking of ESG compliance.’
Mr Jones said that ESG has shifted the ‘mindset’ of investment, with increasing demand for highly rated ESG products alone driving up prices of those products’ underlying investments.
He added that TEAM’s investment philosophy was focused on global trends rather than the standard short-term approach of quarterly benchmarking.
‘It’s our ability to take a step back and look at what’s happening globally, with things like ESG and the flow of money,’ he said.
‘It may take more than a month or the next quarter, but if we’re right about the big picture and all of these trends that are driving what people do with their money, then we will get it right in a big way over a reasonable period of time.’
Mr Clubb used another sports analogy to sum up the company’s philosophy.
‘If you look at great sportsmen and women – whether it’s Roger Federer, our own Serena Guthrie, or whoever – they are good because they anticipate where the ball’s going to be. Consistent success is about anticipation. It’s the same in investing,’ he said.
‘It’s about anticipating where the ball is going to be. And that’s what we’re trying to do now. Roger Federer does not return every serve, but a tennis match is about more than one serve and investing is about more than one day, one quarter, one month or one year.
‘It’s about winning as much of it as you can. And that is about anticipation. We do things differently.
‘It doesn’t mean to say it’s right all of the time – it’s just different and it’s about choice.
‘If you are running money for either yourself or somebody else, surely it makes sense to have some diversification.’
He explained that technology trends had hugely changed the investment industry during his career, and this was now a dominant feature of TEAM’s work.
‘The difference that we have in today’s world versus ten years ago, 20 years ago or 30 years ago, is that we now have billions of data points that you can pick up from using big data, AI and machine learning every day,’ he said.
‘We use information providers that are basically bits of software that are the equivalent of having a skyscraper full of analysts looking for data. It’s just in today’s world that skyscraper full of analysts is basically a piece of software.
‘We’re not ‘‘guesstimating’’, but we can take that hard data and then we can override it or we can adjust it. Our strapline is “real world investing” because that’s what we’re doing.
‘We’re trying to invest in a world today, tomorrow and the next 30 years, not the last 30 years. We’re not trying to invest in a 1990s world.’
With TEAM looking to make further acquisitions to expand its growth, Mr Clubb outlined his vision of it becoming respected internationally and spread across several jurisdictions.
‘The near-term ambition of TEAM plc is to grow in Jersey in terms of substance. We would hope to grow our assets under management through £1 billion in the next few years through both organic growth and acquisition,’ he said.
‘At a TEAM plc level, we will look at other acquisition opportunities in other jurisdictions, not just the international finance centres, but possibly onshore. It’s always going to be in wealth management or aligned services, but it’d be great for Jersey, and it’d be great for us if a little old Jersey company, TEAM plc, controlled a good-sized onshore business.
‘Maybe we can flip it around for a change, so that the advisers and the relationship managers in the UK have to take their investment instructions from Jersey and not the other way round.’