“Great fund managers recognise this is a team sport.”
Building and cultivating teams on the buy side is no easy task for those sitting in leadership roles today. This problem is made worse as asset managers are made to compete with big tech or innovative start-ups for such a limited talent pool.
Mitesh Sheth, chief investment officer at Newton Investment Management, spoke to Trader TV about what to look for when hiring for the buy side and the critical ingredients for creating a well-oiled front office desk—which includes talent, and increasingly, new and evolving technologies.
Hiring, however, is only one part of the process. The CIO also delves into the importance of continuous training and upskilling and how those in leadership roles can best approach this.
Sheth discusses the role of diversity in building a portfolio of good fund managers, whether diversity itself can be measured, and how to achieve the right balance between diversity and inclusion.
“People rush to tick demographic or other easier-to-access data diversity boxes without really focusing on the inclusion and belonging piece that is critical, ” says Sheth.
Interview Transcript
Jo Gallagher Welcome to trader TV Generation trader. We look at the positive impact of diversity on a trading desk. I’m Jo Gallagher. Today I’m joined by Mitesh Sheth at Newton Asset Management, to discuss how to build and cultivate teams on the buy side. Mitesh, welcome to the show.
Mitesh Sheth Thank you so much for having me.
Jo Gallagher To kick us off, tell me about your role as chief investment officer and what that involves.
Mitesh Sheth As chief investment officer, my job is to manage the investment teams. So that’s portfolio managers, analysts, traders. Both quantitative and fundamental or discretionary in nature. If you think of an individual portfolio manager investing in stocks bonds, for me, my portfolio is a portfolio of people, kind of talented individuals, each with their own skills, but also with their own blindspots that I’m bringing together to try and ensure that the whole is greater than the sum of its parts. And increasingly, that’s not just humans, it’s also machines and technology, the processes and tools as well. And so for me, it’s really making sure that I have the right people in the right roles, doing the right things in the right way. That’s the essence of my job.
Jo Gallagher And what do you look for when hiring fund managers and building a team?
Mitesh Sheth The number one thing is their ability to take risk. It’s being able to make decisions in the absence of complete information. That’s at the heart of the fund management job. If you wait for all of the information to be captured for all of the data, it will be in the price and you’re not going to make any money for your clients from it. That’s a core skill set. And then if I’m really looking for the edge between the best fund managers and the very many average ones, it comes down to self-awareness. It’s people who understand their blind spots, their strengths, their areas of difference, and can really lean into those as well as lean on others who’ve got strengths that they don’t have. Great fund managers recognize that this is a team sport.
Jo Gallagher Hiring is only one part of the team building story. How do you also go about upskilling and training your team?
Mitesh Sheth I think fund management is the best job for someone who wants to continuously learn. Markets never standstill. There’s so much to get your head around and just when you thought you’ve got it, someone else’s programed it and you’ve got to find a different way of approaching it to be able to perform or outperform your peers. However, where I think fund management organizations are poor is in training the softer stuff. And actually I think the soft stuff is the hard stuff. Understanding your biases, how to de-bias your investment process, how to work with others. How to deal with conflict. There are lots of different, softer skills that are critical to delivering great investment performance, that are not trained enough, that I focus a lot of my time and energy on, really targeting, training those softer skills that practice, but also delivering coaching to make sure that people are able to learn those things.
Jo Gallagher Why is diversity important in fund management and how do you measure it?
Mitesh Sheth If we were to hire the same kinds of people who grew up in the same kinds of family structures, who studied at the same universities, the same subjects, and then we trained them in very similar training programs, gave them the same tools. Why would we expect them to deliver differentiated performance? You want people who look at the world through a different lens. Who have a different risk appetite. Diversity is about different types of people, different types of minds, different perspectives, because you’re trying to understand a dynamically evolving, hugely complex set of markets. That’s all a bit soft and wooly, and I think building diverse teams is. So how do you measure it becomes really difficult because we tend to measure data that’s easy to come by. Whether that’s demographic diversity, whether that’s race and ethnicity. But cognitive diversity is really hard to measure. Risk appetite diversity is really hard to measure. And not just that, what I find when you’ve had a team work together for a while, they become more homogenous. And so again, you have to be able to, as a leader, bring diversity to have enough grit and friction within the group, creating an environment where people belong, where people feel included, where people bring their best selves and are able to take risks and make mistakes. But also one that has different ways of looking at the world is critical. That is the job. That is how you build high performing teams. It’s not an add on. It’s not an afterthought.
Jo Gallagher Is there a balancing act when it comes to achieving diversity?
Mitesh Sheth I think you’re constantly as a leader trying to remain in this productive zone of discomfort. That’s got to be the leader’s job. And that’s a really fine balance between creating safety, inclusion and belonging, and creating enough friction and discomfort within a team that is really important. Let me give an example. When you bring a team together, let’s take a really simple example. Five people in a team, five different countries, five different languages and five completely different kind of sets about bringing in subjects. You can imagine how hard it might be for that group of people to even communicate, to even get on the same page, to understand where each other is coming from before they can ever get on to talk about say an investment decision. And so real effort is required to understand what different perspective is each person bringing. And so again, I think people rush to tick demographic or other easier-to-access-diversity data boxes without really focusing on the inclusion and belonging piece. That is critical. That’s how the whole becomes greater than the sum of the parts.
Jo Gallagher What’s one piece of advice you would offer someone in a leadership role when it comes to creating better teams?
Mitesh Sheth The one piece of advice I’d give is leadership is not about status or recognition. Quite often, actually, it’s the opposite, where ultimately your job is to elevate and multiply the efforts of others. So you’re taking the spotlight from yourself and shining it on others. We’ve all had good and bad leaders, and we’ll remember those good leaders who gave us the support, the nurturing, the platform, the sponsorship, the opportunities to thrive and succeed. Those more selfless, more comfortable in their own skin. But too often we have people rushing into those leadership roles when they’re still pretty insecure, when there’s still so much for them to prove themselves, when they’re still trying to figure out what mark they want to leave, they tend not to make great leaders. That’s my one piece of advice.
Jo Gallagher I would like to thank Mitesh for his insight and of course you for watching. To catch our other shows, including Trader TV This Week every Monday at 6:45 a.m. London time. Go to Tradertv.net or sign up to our mailing list at tradertv.net/subscribe.
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