Fund Manager Portrait: Jian Shi Cortesi

For as long as she can remember Jian has been interested in managing money. She fulfilled that ambition when she joined GAM Investments in 2010, where she is responsible for two Asia and China equity portfolios.

9 May 2019

“Over time I have derived my own philosophy, which is a mix of value and growth and looks at very different things in each. The growth companies that interest me are those which can expand their revenues and income while trading at a reasonable valuation. Even if we overpay a little at the start, if the growth is there a company can start to look very attractive after a couple of years. Value, meanwhile, is all about paying a cheap price and having a margin of safety.”

Jian grew up in China, and it was in middle school that she developed a taste for managing money. “I asked if I could manage the money for my family. I took charge of the family budget, looking at utilities, food, tracking spending and paying bills. I liked doing it and it made me feel important.”

Her parents are both from an engineering background and were strict about saving money. Jian would regularly accompany her father to the bank, which she always found fascinating. “I did my bachelor degree in Beijing and started earning my own money by tutoring English, doing translation work and working as a tour guide. One day a friend of my father’s mentioned to my dad a company which was due to IPO and asked if he wanted to participate. He didn’t, but it grabbed my interest and I put all my savings into it. It was a telecoms company called CITIC Guoan Information Industry and after a few months the stock had doubled.”

The act of buying a stock and achieving an attractive return galvanised Jian’s interest and she started researching investing. “Most of the books in China focused on trying to predict the market and I supplemented this by reading papers and studying charts. Looking back none of them really worked. At the time of the mid 1990s up to 2000 there was a bull market in China so if you bought almost any stock it was likely to go up.”

After graduating with a bachelor degree in international business, Jian worked for Dow Jones in Beijing as an editor covering Asian markets. “This role furthered my interest in stock investing and in 2000 I went to the US to do an MBA and started reading more books on investments. When I read books on Benjamin Graham and Warren Buffett I realised I developed ideas about how I wanted to invest.” She began consuming all the reading materials she could related to Buffett, and bought shares in Berkshire Hathaway, which enabled her to attend the annual meeting in Omaha each year. “I’ve been very much influenced by his philosophy,” she adds.

In the US she worked first as an equity analyst then an investment strategist, focusing on Asian equities. “My dream was to become a fund manager. Then in 2009 I married my husband, who is Swiss, and moved to Switzerland, which ultimately led me to joining GAM in 2010 and fulfilling my ambition.”

Jian says she was very much a value investor when she started out, trying to understand which companies were cheap compared with how much they were worth. “I came across value traps and I made some mistakes. In time I started to include a growth element in my approach. In Asia and China the most attractive opportunities tend to be in growth stocks; they can often have long-term revenue growth and earnings growth.” She also extended her reading, learning from books and from her own mistakes when corporate results didn’t meet her expectations.

Jian strongly believes that the first thing to do when investing in a particular market is to focus on the right areas. “You can be a mediocre stock picker but still do really well if you’re in the right place. In the 1980s we saw this with Japan, likewise with technology in the 1990s and in the 2000s the sweet spot was commodities. In my work I look across China and Asia and consider where the most attractive places to invest are. The big trends at present are consumption growth and technological advancement – these areas are growing faster than the rest of the economy and that difference is reflected in their return potential. Therefore my stock picking is currently focused on these areas.” On the flip side, Jian is avoiding sectors such as heavy industry and raw materials which she does not expect to benefit from the consumption boom.

The result is a concentrated portfolio, diversified across both growth and value stocks. Jian wants to hold growth stocks which she feels can prosper over the next five to 10 years. “Unless they become very overvalued we tend to hold on to them, although obviously it is difficult to always judge these things correctly. If they turn out to be a ‘shooting star’ [delivering strong growth far more quickly than anticipated] we would typically sell them. With value stocks, meanwhile, as soon as the valuation plays out, or if the fundamentals of the company start to deteriorate, we would typically sell out of the stock quickly.”

As well as identifying opportunities in areas related to technological innovation, consumer spending as a result of the burgeoning middle class, especially in China, is a key theme. “Middle class income is increasing in general. Where are they spending the money? It’s going into consumer discretionary companies and more is being spent on healthcare, financial services and insurance.”

Jian notes that Asia is well known for technology hardware, as well as tourism, particularly in South East Asia, and for this reason is focused on where she believes Asia is already strong and is likely to get stronger.

Away from work, she spends much of her spare time with her family. “Work is my passion. I love my job but I’m also quite traditional and like to spend time with my husband and eight year-old son. My husband also has a lot of hobbies such as wine, travel and seeing friends so I accompany him and support him.” Her childhood interest in managing money and banks has clearly been passed down to her son, who she says likes to play bank teller.

As an antidote to her day job, Jian does a lot of gardening in order to relax. “I like cutting branches, weeding, planting flowers. It gets me outdoors too. Instead of the long-term gratification of fund management you can get some more immediate gratification from gardening. In portfolio management you can work hard, but with the best will in the world the results may not be what you expect. In gardening, however, you can very quickly see what the result will be.”

Recently she has also taken up flamenco lessons, jokingly declaring it is an activity she is not necessarily very good at but definitely has a passion for.

Jian says the Chartered Financial Analyst (CFA) Society has had a major influence on her life, determining what she is doing and where she is living – even to the extent of meeting her husband at a CFA conference. “I’m actively involved with the CFA Society in Switzerland and started volunteering with them in 2012. I’ll soon be joining the board of directors. It gives me a warm feeling being able to contribute and give something back.”

Even though her investment process was developed in the US and influenced by western investors, Jian notes the importance of her heritage and local knowledge when investing in China. “My background growing up in China helps with this. Industry, sector and company operations tend to change much more rapidly, so you have to be very nimble.”

“I talk to my colleagues Ernst Glanzmann and Reiko Mito, who manage our Japan portfolios, on a regular basis. They like to focus on long-term quality growth. I would love to do that in China but it’s difficult to apply that style. In general Asia is a region that’s very diverse, for example look at the huge differences between countries like Thailand and Korea. European countries, by comparison, have far more commonality. It’s very difficult to be an expert in every single country, and because of my background I tend to get deeper info in China. In other parts of Asia I focus more on larger-cap companies.”

Running portfolios from Switzerland offers a different perspective, in Jian’s view. “You get some information a couple of hours later than local markets, but I rarely trade on news. My approach is not really a game of speed. Moreover, when I visit Asia I notice the changes more than I would if I were actually based there. They really jump out at you and I see that as an advantage. There’s less noise and you’re less likely to be influenced by local sentiment. Being a bit detached helps me to be more stable and makes it easier to go into non-consensus ideas. You need to have a strong personality to maintain your independent thinking.”

At the same time, Jian demonstrates her modest nature by omitting to mention she was recently nominated for the Fund Manager of the Year award in Investment Week’s Women in Investment Awards 2018, something of which she should be rightly proud. The awards seek to honour the achievements of women across all parts of the industry.