Investing & Performance | 16 January 2024

A conversation with Coutts’ new CIO: “You absolutely need a guiding philosophy in this job.”

Our new Chief Investment Officer Fahad Kamal tells us about his investment philosophy, his view of markets and his love of cricket…

Fahad Kamal hasn’t always been an investor. He worked in mergers and acquisitions and international development before turning his attention to portfolios and funds in his early thirties. But that diverse experience has proved invaluable for him today, helping him look beyond the numbers to the more human, real-world impact of his job.

He celebrates 14 years in investing this year, four of them as Chief Investment Officer, and took up that position here at Coutts in December. His many responsibilities include steering the bank’s investment house view – what we like and don’t like when investing and how we see markets playing out.

We managed to get some time in his busy diary to find out more about him.

Tell us more about your background

I came to investing in a very non-linear way. I grew up in Pakistan, then moved to the US for university. I had various jobs before I got into investing, including working on an international development programme for the US government. Then when I turned 30 I did my MBA in London, joined Kleinwort Hambros – then Kleinwort Benson – as a junior investor, and never looked back. I worked my way up over the next decade or so and became CIO.

My experience in other areas before I got into investing has really helped me. It gave me a different perspective, helping me understand risk, and the human element of what we do. It means I’m not just driven by the maths, the quantitative side of things. I can put some qualitative flesh on those bones.

Do you have a guiding philosophy about investing?

Very much so. You absolutely need a guiding philosophy in this job. It’s about what we believe in as investors. Our approach at Coutts comes down to three things.

Firstly, we take risk where we believe it’ll be well-rewarded. Everything we do in investing comes with an element of risk – even not taking a risk is a risk. We have a framework in place to help ensure we take ‘good’ risks – i.e. risks with a high probability of a successful outcome.

Secondly, we aim to protect on the downside. In other words, we diversify our investments to try to pre-emptively manage losses within acceptable limits. After all, we are all about capital preservation, something that’s critical for many of our clients.

And thirdly, we exploit sudden market shifts. Markets are strange, capricious things – often irrational in the short run – and such times can present the best opportunities. We need to be ready to take advantage of that.

At the heart of all this are two key concepts – ‘anchor and cycle’.

Anchor is about the long term, getting the big asset allocation decisions right and focusing on five-year time horizons. It’s about our long-term themes and appreciating that, while short-run asset prices matter, it’s the long game that really matters.

Cycle is about where we are now in the business cycle, the current market mood and the policies coming out of governments and central banks. It involves looking at the macroeconomic environment today and making tactical moves to make the most of it.

“Markets ended 2023 strong and that momentum has continued into this year so far.”

Fahad Kamal, Chief Investment Officer, Coutts

Speaking of current conditions, what's your view on markets today?

We’re in a good place. Markets ended 2023 strong and that momentum has continued into this year so far. This positivity can be seen reflected in Coutts’ own investment performance, which also ended last year strong. I’m very optimistic about the future.

The chief worries of last year have abated, if not disappeared. At this time last year, markets were ‘sure’ there would be a US recession. And we were sure that inflation would continue to be a problem. But a recession is no longer our base case and inflation, while still high, has dropped significantly.

These economic factors are the things to watch rather than the notable noise that’s going to be generated by the various elections around the world this year. These are the types of things that will really drive market performance.

The value of investments, and the income from them, can fall as well as rise, and you may not get back what you put in. Past performance should not be seen as an indication of future performance. You should continue to hold cash for your short-term needs.

what do you like about your job?

Markets are the world’s greatest drama, more than sports, theatre or cinema. Their impact on people, products, companies and economies is a thing to behold. And I get a front row seat to all that. And managing all that for the benefit of our clients is something I enjoy. I also like how, when done right, investing could really help people grow their money and get what they want out of life. It’s inspiring.

And what about when you’re not working – what do you do in your spare time?

Well, I’ve got two kids – who are three and five – so I don’t get much free time. My world revolves around focusing on work during the day, managing risks, then rushing home to manage risks of a very different kind!

My big passion is cricket though, a game I absolutely love. I watch it whenever I can and spend as much of my summers at Lord’s as I possibly can – it’s my happy place. I do love sport generally, especially if it involves a bat!

You can read all the latest views from Coutts on the year ahead for investors in our latest Investment Outlook 2024.

READ THE INVESTMENT OUTLOOK

You can read all the latest views from Coutts on the year ahead for investors in our latest Investment Outlook 2024.

READ THE INVESTMENT OUTLOOK