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Guy Morrell

The HSBC Global Asset Management head of multi-manager talks about launching his open global property fund in turbulent times for the market but he has no regrets. Interview by Gregor Watt


The last few years have been a rollercoaster ride for all the investment markets and the property market has been no exception. If you add launching a fund at the beginning of the property downturn in 2007, HSBC Global Asset Management head of multi-manager Guy Morrell has had more than enough going on to keep anyone from getting bored.

A little over two years since the launch of the HSBC open global property fund and Morrell is looking relaxed. With the fund having outperformed the sector average by around 20 per cent since launch and sitting in positive territory, it is easy to see why.

After studying land management at university, he entered the world of property investment as an investment surveyor for property firm Healey & Baker. However, it was his next job that firmly established his career in investment management. He joined Prudential Portfolio Managers as part of the company’s move to establish an independent property research team in the late 80s.

Morrell recounts that at that point most investment firms did not carry out their own research but instead relied heavily on information from the big estate agencies.

He says: “It was the first major institu-tion to do that and the rational was that the Pru did not want to rely in the inform-ation given by agents.”

In addition to helping build the property research team, Morrell was also researching a PhD on the subject of commercial property investment part-time, looking at property portfolio construction and what drives property performance. “I have to say that research has continued to be relevant and I still draw on what I learned then in my day-to-day role.”

From Prudential, Morrell then moved to join AMP Asset Management, which was then acquired by Henderson Global Investors, as he as keen to move from research to asset management.

“It was an opportunity to apply some of what I had learned,” he says.

Having risen to the position on chief investment officer for global property at Henderson, Morrell was looking for a fresh challenge which took him to HSBC Asset Management.

He was recruited to set up the indirect property business. By 2007, he was ready to launch their first multi-manager fund, which was going to be a UK only but the state of the UK property market in early 2007 was giving him real cause for concern and the plans were shelved.

“It was a painful decision at the time but absolutely the right one. We felt the UK commercial property market, having performed really strongly in the precee-ding decade, was unsustainable.”

Instead, the open global fund was launched in November 2007, with a remit that not only offers the manager the choice of worldwide property markets but also allows Morrell and his team of three analysts full flexibility to move between funds that invest directly in property and those which invest in property securities.

He says it is this combination that enabled the fund to avoid the worst of the property downturn. At one point in 2007, the fund held no UK direct property within its portfolio and at its most defensive in 2008, the fund held more than 30 per cent in cash.

The fund moved into UK direct property close to when the market hit its lowest in the second quarter of 2009 attracted by improved yields and attractive valuations. But although he was very quick to spot the turning point, Morrell says he has been surprised by the strength of the recovery in the UK property market.

“The recovery in the UK market has been much stronger than we anticipated. I thought there would be a much slower, more robust recovery in the UK, that there would still be a lot of scepticism from investors.”

He believes the turn-round in investor sentiment has been driven by one factor. “Yield is the main thing. The yields available from cash and other investments are so low. Property is seen to be provi-ding a high yield and also there is a view that things have bottomed and seem to be improving.”

But Morrell warns that the current popularity of property and the weight of money coming in could overshadow the lessons that property fund managers need to take out of the last few years.

He says that while some managers dealt with the market collapse very well, there are some fairly fundamental points that need to be learned, including better reading of the market and a closer relationship between fund managers and those marketing and distributing the funds to avoid a situation where managers are taking a negative view of the market but the fund is still being actively promoted.

He also says lessons on better managing of liquidity and the use of gearing need to be learned.

And although he remains cautiously optimistic about the outlook for commercial property, he says there are a couple of pitfalls to look out for in the shorter term.

“There are two areas I would highlight. There is the potential that investment demand is so strong that it drives short-term performance but leaves the market unattractively priced. The second risk is related to the health of the UK economy. No one knows for sure what exactly it is going to be like but we all know we are in for a rough time. That will affect individuals and it will affect businesses.”

But despite the difficult last two or three years and an uncertain future, Morrell says he has no regrets about the timing of the launch of the fund.

“If you can come through a period like that in terms of performance and do well and build up a good track record, it is a good learning environment.”

Born: Folkestone, Kent
Lives: Kent with his wife and three children
Education: University of Reading (PhD); Leicester Polytechnic (BSc (Hons) Land Management); Chartered Surveyor
Career: 2008-present: head of multi-manager, HSBC Global Asset Management (UK); 2004-present: investment head of global property within multi-manager business, HSBC Global Asset Management (UK); 1996-2004: director of UK property and CIO for global property, Henderson Global Investors/AMP Asset Management; 1987-96: assistant director, property research team, Prudential Portfolio Managers; 1984-87: investment surveyor, Healey & Baker
Likes: Cycling, hiking, tennis, Radio 4 comedy podcasts
Dislikes: Scrambled egg
Drives: Volvo
Book: Peter Bernstein’s Against the Gods: the Remarkable Story of Risk
Film: Watching anything funny with my children
Album: Anything from the Beatles to Mahler
Career ambition: To remain enthusiastic, motivated and working with talented people
Life ambition: To have a happy, healthy family-oriented life and to play the piano half as well as my children
If I wasn’t doing this, I would be… doing something with numbers at a university


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