60-second interview: Mark Slater

 

What does Slater Investment do?

We focus on investing in UK equities. We have a growth strategy and an income strategy; they’re our two main strategies. The growth strategy focuses on companies which we believe offer reliable growth prospects, which we can buy relatively cheaply and over time; that’s a very powerful strategy. The income strategy is very different. The focus there is on dividend and yield. What we’re trying to do there is generate above average yields that again, will grow. 

In terms of clients, we really cover the whole piece. So quite a lot of our business is institutional, which typically is the large pension scheme and big corporate pension schemes. A large part of it is retail funds and the investors in those range from people with their ISAs and SIPs too, so from normal retail type investors through to high-net-worth investors and smaller pension schemes as well. 

What are high-net-worth individual’s priorities right now?

Right now, I’d say it’s not to lose money!

But more generally, people come to us for a very particular thing. So they want us to do our thing, and the bulk of the money we run is focussed on the growth strategy.  In wanting that, they want pretty good returns, but they want an acceptable degree of risk.

What is the greatest concern for these individuals at the moment?

Brexit obviously creates uncertainty; the slowdown in China is a bigger concern than Brexit, that’s definitely on people’s minds. It’s not new because China has been slowing for quite a long time now, but it’s more acute now.  The possibility of rising interest rates is definitely on people’s minds. Again that’s not new, ?but the difference is they actually have gone up now, so it’s happened.

The way we approach things is that those things are less important than valuation. Macro concerns are always there; there’s nothing new about it. The most dangerous macro phenomena are the ones you don’t think about, the ones that come out of left-field. For instance with the oil price, nobody two years ago thought the oil price would be $27 a barrel. Nobody was forecasting that. 

Do you have any personal concerns?

Everything concerns me up to a point, but I would say the one thing I am most comfortable about getting right is my analysis of the companies we own. There’s nothing easy about it, but it’s the easiest thing to get right. I am obviously worried about the same things everybody else is worried about, but I don’t think that it’s worth a lot of attention. I think valuation and things you can genuinely get a handle on are much more important; they’re more worthy of time. 

 

 

What key trends do you see developing?

The changes to the pension regime are going to be significant. That’s not just for high-net-worth individuals but for every individual generally. The changes there are going to have a big impact on the wealth management industry. Those are going to be positive changes as they’re going to give people more control of their lives. That’s going to be a very important trend and we’ve just seen the very beginning of that. I’d say that’s the main change that’s going to affect the industry.

Is there anything in the industry that you’d like to see change?

I think the industry’s biggest weakness is it’s fixation with labels. There’s a general urge to label things and put them into a neat box. For instance, the word risk. The industry defines risk, I think, in a ludicrous way. It measures things like beta and volatility. Volatility does not measure risk; it has nothing to do with risk in my view. It doesn’t tell you anything about valuation, it just tells you that things are moving a bit, but that isn’t risk. Risk is when you lose your money or when you face losing your money.   

You see it with the way that funds are categorised because people want to label what it does, so you have terms like value or growth. They’re made out to be extreme opposites, which they’re not, ?or at least they don’t have to be. 

Mark Slater is the chairman of ?Slater Investment Limited