One of the questions I get asked most often is, what are the softer attributes of a successful manager?
Alas, our Citywire Ratings are purely quantitative, looking at the risk-adjusted returns of every fund run by a manager over the past three years. But we do ask portfolio managers to fill out extensive questionnaires detailing their interests, schooling and so on. Of our database of 15,000 portfolio managers around 10% provided this information.
From these questionnaires we can begin to gain insight into how managers occupy themselves when they aren’t contemplating portfolio beta, interest rate uncertainty and price to earnings ratios. What an individual does in their free time is as revealing as what they do at work.
The most popular hobbies for Citywire-rated managers
The single most popular hobby listed is listening to music, with a whopping 38% of fund managers naming it as their favorite pastime.
Next up we have 36% of respondents listing skiing and snowboarding as their favoured pursuits. Does this suggest risk-taking is part of their daily lives or is it merely that their salaries have afforded them the privilege of this notoriously expensive sport?
Looking down the list, hobbies such as tennis (26%) and golf (23%) would also tend to fall firmly into the more expensive sporting bucket.
Nearly a third of fund managers (28%) put the world’s most popular sport, soccer, among their top picks.
CLEARING THE MIND
But does this tell us anything about a manager’s ability to beat the market?
Well, if we look at which hobbies have the highest correlation to outperformance over three years until the end of December 2016, it should show us which pursuits produced peak performance. It is worth noting that the chosen time period includes two of the leanest years for active management outperformance – 2014 and 2016 – with just 27% of portfolio managers outperforming globally over the whole time.
Perhaps, then, it is not surprising that yoga comes out on top, with a massive 45% of individuals who listed this among their hobbies outperforming and receiving a rating over those three years.
The supporting cast also make for interesting reading, with 40% of those who like to pit themselves against nature, with a vigorous hike, being rated.
Next up, the strategy games backgammon and chess. Thirty-nine percent of respondents who named these hobbies among their favourites were rated. When the card game bridge is added into the mix, there seems to be a strong correlation between game playing and success.
TOP OF THEIR GAME
When we group the hobbies together by category, we can see games emerge as the clear winner, with 38% of those listing a board or card game among their favorite hobbies receiving a rating. Not only that, but 13% of managers who listed board or card games hold a Citywire AAA rating for outstanding risk-adjusted returns, whereas the global average for managers with this rating is 10%.
I personally love this statistic – if we think of finance as an elaborate game then why wouldn’t the tacticians, who indulge in these pursuits, come out on top during this particularly trying period for active managers? Not only that, but unlike several of the most popular hobbies, such as skiing and golf, there isn’t an entry fee, with almost everyone able to access a chessboard or a deck of cards.
Another point to note is that those individuals who listed any hobby were more likely to be rated than those who didn’t. Something to ask at your next fund manager meeting, perhaps.