Skiing and banking have always been part of Guy de Blonay’s life. The Geneva-born manager of New Star’s top-performing global financials fund spent much of his childhood at the renowned slopes of Verbier and learned a thing or two about banking from his family and their friends while he was at it.
But it was not always de Blonay’s intention to work in financial services. Like many teenagers, following in his parents’ footsteps was the last thing he wanted to do. He studied philosophy at the Institut Florimont and law at the University of Geneva. However, embarking on a career as a lawyer lost its appeal and wise words from family friends encouraged him to move into the finance sector after all.
In 1994, en route to New York where a job was waiting for him, de Blonay stopped off in London and 12 years later he is still here. He attributes this change of plan to his mentor, John Duffield. At the time, Duffield was in charge at Jupiter Asset Management and took de Blonay under his wing as a trainee. He relished the work at Jupiter and his plans to conquer Wall Street faded.
In 1997, de Blonay was put in charge of Jupiter’s emerging markets fund. He later moved to the UK specialist team, working alongside Alan Miller and Edward Bonham Carter, and then concentrated on pan-European stocks for the ethical investments department.
In 2001, Duffield left Jupiter to start New Star, taking with him three of the top fund managers including de Blonay. That year, de Blonay launched the global financials fund and in 2002 he set up the financials hedge fund. He has run both ever since.
De Blonay says setting up the global financials fund was “one of the biggest and most attractive opportunities” he has ever had.
“Financials are the greatest sector. It is the biggest sector in the world and has the biggest diversity between sub-sectors. The fact that the correlation is so low between each sub-sector means they are acting or behaving very differently so, in a declining market, you could have 50 per cent of these sub-sectors going down but you will always find sub-sectors that are going up.
“This means you just need to be at the right time at the right place. That is what I think is so interesting because, for a long-term fund like this, it gives you some sort of natural hedge. If you are in technology and the sector as a whole decides it has to be valued 20 per cent lower, you have no place to hide. In this sector, the diversity of sub-sectors always allows you to be able to make money in any type of market conditions.”
De Blonay has a very impressive track record. Performance figures released this month by Lipper show that the global financials fund has returned 189 per cent over five years – far ahead of its closest rival on 130 per cent.
“The figures are an achievement. It does not mean it is sustainable, it does not mean it is a guide for future performance, but we have worked hard over the years to try to build that kind of level and there is no reason, in my view, unless there is a major disaster or dislocation in the financial markets, for these markets to just deteriorate. I am often asked what has been my greatest success and I guess the greatest success is to have been able to avoid disasters.”
As far as investment styles go, he says a pinch of growth and a dash of value generally makes for delicious returns.
“My investment style pretty much involves looking for growth but growth at an attractive price so there is an element of value there as well. The income aspect is also important as it helps you to gauge or assess the downsize potential. A company which would be perfectly adequate for this fund would be a growth stock at an attractive price, yielding above average.
“We are trying to play recovering Germany, we are playing the high growth in Eastern Europe, we are also playing the Italian above-average margin outlook.
We try to stay liquid and be quite active. If the team does not work, we get out. If the team is coming to an end, we switch to a new one. Because of the diversity of the sector, we think we can generate returns in any conditions.”
More than 50 per cent of New Star is owned by its employees, meaning that the firm’s interests are aligned with investors, says de Blonay.
“I have my money in these funds so I am trying to align my interests to my shareholders as well as theirs to mine and I think that is the healthiest way. Everybody is working hard. Well, actually, you do not have to work because you are just buying the stock but we are all working for a common interest.”
He still makes time to ski in Switzerland each year and enjoys playing golf, comparing it with the mental challenge of his fast-paced profession. He believes that carefully calculating each shot has similar risks and rewards as choosing companies to invest in for his clients.
“Golf is a mental game. Every shot counts, not like tennis where you have a second chance. If you have a disappointing hole, you are almost certainly out of contention for the rest of the game. It is all about avoiding disasters.”
Born: 1970, Geneva, Switzerland
Education: Studied philosophy and literature at the Institut Florimont, completed a year of Swiss military service and studied law at the University of Geneva
Career history: 2001 to date, manager, global financials fund, New Star Asset Management; 1995-2001, Jupiter Asset Management
Drives: BMW 650i
Favourite film: The Godfather
Favourite book: Most recently, Liar’s Poker
Favourite composer: Ludwig van Beethoven
Career ambition: To keep raising the bar
If I wasn’t a fund manager, I would be…An art dealer