Six portfolio managers of Pictet’s successful water fund have been investing on their own for the last five years. What have they achieved during this time?
Five and a half years ago, a six-person team moved from Geneva-based Pictet Asset Management to Paris-based Natixis Investment Managers. This caused a stir, as the crew had previously managed the Swiss fund house's highly successful water fund, which is still a flagship of the company today.
With the support of Natixis, the team led by Karen Kharmandarian founded investment firm Thematics Asset Management. As the name suggests, the firm initially launched three thematic funds at the end of 2018 focused on water, security, and robotics/AI. Natixis holds 50.1 percent of Thematics, while the remaining shares are held by the six founding partners and other executives.
Utmost Care
«From the very beginning, it was clear to us that we would proceed with the utmost care in terms of fund size and strategy capacities,» said Kharmandarian in an interview with finews.asia. However, as Thematics took off, Covid limited its development.
Nevertheless, the crew launched another two thematic funds focused on wellness and the subscription economy. The former fund invested in companies that are active in healthcare and, in the broadest sense «well-being», and the latter invests in companies that offer subscriptions of all kinds and thus generate recurring revenues. Thematics grew, albeit more moderately than originally planned.
On the Radar of Large Investors
Now, the firm is taking stock for the first time in five years. With fund assets of just under $4 billion, the company, which now employs 22 people (including 11 investment managers), is in the targeted range of 3 to 5 billion Swiss francs ($5.5 billion), as Kharmandarian previously told finews.asia in April 2019.
«We are now on the radar of larger institutional investors,» he said, adding that the firm is expected to generate a significant inflow of assets in the coming months, given its size and performance, which opens prospects for new funds.
Four Criteria For One Topic
However, the Thematics boss also admits that it is not easy to find convincing new themes. Certain ideas risk covering only one niche on closer examination so that the investment universe is too limited in the long-term.
«We have four criteria for evaluating a topic that becomes a strategy,» Kharmandarian outlined. «Firstly, it must be a long-term theme. Secondly, it must have a broad scope in different industries and regions. Thirdly, the impact of the issue on companies must be measurable in terms of both quality and quantity. And fourthly, the criteria of a responsible investment approach must be followed.»
Under these premises, Thematics has rejected various themes after thorough examination such as a space or hydrogen-based energy fund.
Fintech in View
As a rule, Thematics needs around 18 months to package a new theme in a fund and bring it to market. The investment vehicle will then invested in 40 to 60 stocks. And against the backdrop of the recent, often disruptive changes and developments in the financial industry, Kharmandarian sees good opportunities in the fintech sector.
«There are many interesting up-and-coming companies here that could achieve a leading market position in the next few years and become shapers in the industry. Fintech has huge potential as an investment theme,» he said. «We are looking at a strategy that aims to be positioned between listed, liquid stocks in our currently managed strategies and the unlisted space. [In other words], strategies that are in their post-IPO and scaling phase.»
