Risk and reward are inseparable in asset management, and Swiss asset managers excel at striking this balance. With the Swiss banking sector being the global leader in cross-border wealth management services with a staggering 25% market share, their services and expertise are outstanding. As a part of Professor Suleiman’s Portfolio Analysis and Asset Management course at Franklin University Switzerland, students got to sit in on a guest lecture by asset managers Edoardo M. Mango and Alberto Conca. The two local Ticinese asset managers working as Chief Investment Officers for Lugano Financial Advisors SA and LFG+ZEST, respectively, lectured the finance students on the basics of their roles, risk tolerance/analysis, returns, mandates, and behavioral finance. "Short-term returns can be lucky, and the real capability of the asset manager will shine over the long term," Mango stated about an asset manager's ability to work with clients to find the most optimal solutions. Furthermore, he explained how asset managers must evaluate their risks and often use risk tolerance evaluations to help themselves and their clients understand each other's roles and objectives.
In his lecture, Mango highlights that some of the main objectives of investment policy statements (IPS) are to define financial goals, return objectives, and the time horizon. When conducting the IPS, an asset manager can assess the client's risk tolerance. He emphasizes this importance by stating, "It is always about risk. This is what matters in the end." He then gave the students a sample risk tolerance evaluation sheet, which is usually provided to clients when they open their accounts. The survey probed investment-related questions to gauge the respondent's expected returns and tolerance to risk or lack thereof. He elaborated that the risk tolerance evaluation allows reconnecting the client to the originally agreed upon IPS. During this activity, he explained the relevant tasks of an asset manager, acting as an intermediary between the client and the bank. In doing so, they need to understand a long list of essential information, including investment objectives, risk tolerance, asset allocation guidelines, investment constraints, rebalancing strategies, performance evaluation, and amendments to the IPS.
"Money is emotional" is what Alberto Conca stated in the second part of the lecture, which focused on behavioral finance. In this part of the lecture, he provided insights into his line of work, particularly his specialized "quantamental strategy." Both speakers stated that "60% of our job is managing expectations. For both people that are and are not asset managers". Because of this expectation, Conca states that he aims to quantify as much as possible in his asset management philosophy. The "quantamental strategy" is a proprietary quantitative screening model that analyzes companies based on the following characteristics: growth, quality, valuation, capital allocation, leverage, price momentum, and market indicators. Ultimately, it is used to identify undervalued companies and create investing opportunities.
After the lecture, the students could connect with and engage with the speakers. The event allowed students to engage with asset management professionals with decades of experience in the finance industry. These experiential learning opportunities allow students to connect theory learned in class to real-world applications.
Written by Jesse Fioranelli Jr. and Denzel Louis
Photos by George Whittaker Curry