“The development of the equity programme is a long-term vision. It’s all about evolving and refining rather than reinventing the wheel. My role involves taking the existing project from its current stage to the next level, the level after that and so on. Most equity market neutral funds, whether systematic or discretionary, aim to deliver returns that are uncorrelated to equity markets over a full cycle, so potential product differentiators stem from the depth of the research and the competitive edge embedded in the process.”
“Looking back on my formative years, I certainly cannot claim that I always had a burning ambition to work in finance – in fact it was a complete accident! Mathematics was my first love and, having graduated from Imperial College in London with a BSc, my initial ambition was to do more maths. I was particularly interested in number theory which is the most intellectually demanding part of the field. However, my tutor said that, although I was smart, I was not a genius and advised me not to go down that route.
“A friend sparked my interest in finance when he told me that a company called Manufacturers Hanover was offering graduate positions with a starting salary of £15,000 a year - which was a fortune at the time. I must admit though that my first thoughts were ‘what do they manufacture?’ and ‘would I need to go to Hanover?’ I didn’t realise that it was a mega US bank that had been created by the 1961 merger of Manufacturers Trust and Hanover Bank!
“In the end I found a job with Deutsche Bank and worked in a trading position for a number of years on statistical arbitrage, which is a very model-driven process and one I found very interesting. However, I didn’t feel that I had finished with education. I wanted to do an MBA but I thought it might be fun to try for a PhD first. I was lucky enough to get a place at New York University to do a PhD in finance. This appealed to the geeky aspect of my personality and, at the same time, did not require the level of genius required to succeed in number theory.
“I guess the biggest difference between the academic institutions in the US and Europe is that the former are very much oriented towards a life in academia. The attitude is one of ‘we have invested in you and your job is now to maintain our academic tradition’. Given my connection to the UK, I returned after graduation and became Assistant Professor of Finance at London Business School, teaching equity investment management and PhD level courses in asset pricing.”
So, what triggered the move out of education and back into the finance industry?
“Although I thoroughly enjoyed lecturing, I still felt the lure of the city vibe from my earlier career experience and the excitement of the trading floor was firmly lodged in the back of my mind. Quite coincidentally a sales guy from Barra risk models was guest presenter at my lectures. He switched companies to go to Goldman Sachs (GS) and told me that GS were looking for somebody to head their European equity derivatives team - the rest is history! My role at GS mainly involved doing bespoke work for clients seeking to hedge large pension funds, which obviously entailed some detailed quantitative input.
When the subject of hobbies is mentioned, Massoud’s eyes light up as he blurts out the word ‘photography’.
“Taking photographs has been an absolute passion of mine for as long as I can remember. I must admit that I was very reluctant to embrace digital technology at first. This must sound like an odd statement coming from a technician, but I just love traditional photographic film. I have also come to appreciate that a true enthusiast will never be satisfied with owning just one camera. I think of all the pictures I’ve snapped over the years my favourite is probably one I took in the Tate Modern. I captured a lady viewing a photograph on the wall of a lady who looked just like her. It was an amazing coincidence and pure photographic poetry!”
While photography might be Massoud’s big passion, he also becomes very animated as the conversation moves on to literature. The author Christopher Morley once quipped ‘There’s no mistaking a real book when one meets it. It is like falling in love!’ By this measure, Massoud first fell in love at an early age and has continued to do so repeatedly.
“The first book I remember reading was ‘Das kleine Gespenst’ (the little ghost) by Otfried Preussler - my mother is German and clearly exerted some influence on my reading matter! She first met my father when he was studying over there, so I am well connected to Germany. I was actually born in Tehran and moved to the UK when I was ten years old. That was in 1977 which was the year of the Queen’s Silver Jubilee. I didn’t understand much English at that point and became convinced that we had moved to the celebration centre of the world! Everywhere I went there were street parties, flags and bunting.”
In terms of adult literature, Massoud’s favourite authors include Evelyn Waugh, Harry Harrison and Catherine Webb. “Evelyn Waugh once said ‘journalism is the envy of the novel’ and while ‘Scoop’ was published in 1938, it is still a brilliant and funny read. The fact that it is a satire of sensationalist journalism and foreign correspondents, and yet is revered by journalists the world over, is testament to the book’s sublime entertainment value.”
By way of contrast, Catherine Webb writes books that can be classified within the science fiction genre, suggesting that Massoud is a man of eclectic tastes. “The plot of ’The first fifteen lives of Harry August’ is a bit like ‘Groundhog Day’ but with much more substance. It is the story of a man who lives the same life over and over again. Each time he dies, he returns to childhood carrying all the knowledge of a life he has already lived a dozen times. His life’s purpose is to save a past he cannot change and prevent a future he cannot allow.”
As the conversation moves on to leisure time, it transpires that Massoud and his family have quite different ideas of what constitutes a perfect holiday. “I don’t know if my liking for landscapes stems from my lifelong interest in photography or whether it is an altogether deeper level of appreciation, but I find mountains inspiring and I love to walk for hours at a time. South Tirol is one of my favourite regions with its outstanding natural beauty, slightly ordered Germanic feel and overtones of Italy. The food is also great – especially when you have spent the day working up an appetite. In contrast, my wife and son prefer beach holidays, so we alternate to keep all of us happy!”
Although Massoud has various leisure interests, he clearly retains all his enthusiasm for his profession and goes on to recall how he first came across Dr Ewan Kirk, GAM Systematic | Cantab’s chief investment officer.
“Ewan became my boss at GS in 2003. We were undergoing an internal restructure and as one of the new initiatives he was keen to develop some new trading algorithms – I stepped in to head the quant team. It was a much more internally focused role than I had become accustomed to but I really embraced the challenges associated with it. In fact, as the role developed, I ended up taking responsibility for front office risk management, trade automation, algorithmic trading and the proprietary quant trading desk. In my final year at GS, I also began working on some alternative beta models.
“However, by this point, I was itching to move away from trading after 10 years in related roles, so when Ewan asked me to join him at Cantab, which is now the biggest component of the GAM Systematic platform, I leapt at the chance. I was effectively placed in charge of a ‘greenfield’ project, taking the best aspects of what I had learnt at GS and augmenting them in order to develop an equity suite for GAM Systematic | Cantab.
“An equity market neutral strategy is the first of these, but the long-term vision is to create a range of strategies with broad appeal, which can offer diversification benefits to a wider equity allocation and are less esoteric than hedge funds.
“The other compelling attribute of systematic strategies is that they are relatively simple to customise, meaning that we can set up bespoke solutions and frame our fee structures accordingly. There is enormous scope for engineering and structuring truly innovative products and I’m delighted to be playing a hands-on role in such an exciting and intellectually stimulating project."