Meeting Arno Lawrenz, Chief Investment Officer, Atlantic Asset Management

  • Q: How did you get involved in financial services - was it always something you wanted to do?
  • A: I started out in the investment world while still at school, making share investments into "penny stocks (that was all I could afford with my pocket-money at the time!). When I finished school I studied in the Actuarial Science field, but quickly moved on to the more exciting world of Investments. With a mathematical and quants background I gravitated eventually towards fixed income as a specialized field of expertise.

  • Q: Interest rates are critical in the investment and fixed income area - it seems that of late interest rate decisions are more political - is this accurate or are interest rate decisions always political?
  • A: I disagree strongly with the view that monetary policy has become a more political decision. If that were true, then we would most likely find that our interest rates would be out of kilter with the rest of the world. By the same token, any fiscal or monetary policy decision needs to take the prevailing socio-economic climate into account. That - at times - may be interpreted to mean that it is more political, but the decision itself should always be interpreted in the right context : It is the process itself that is more important, and in that respect, we do not believe the decision-making process has become politically contaminated.

  • Q: What has been your best and worst moment in the industry?
  • A: The best moment in the industry was when I started Atlantic Asset Management with Murray Anderson, as a specialist and independent fixed income investment house. It was the best moment because it was the culmination of many years of learning and career progression at various other asset managers, and under the tutelage of some giants in the industry. The worst moment was having to deal with the questionable ethics of some colleagues early in my career. It made me all the more determined to be successful without compromising ethical standards.

  • Q: How do you rate South African fund managers and our asset management industry?
  • A: Overall, I think South African fund managers are a very competent and qualified group of people, and generally have very high standards of performance - this also in a global context. There are of course a few rotten apples though, but generally, they get found out fairly quickly, and regulations have made it all the more difficult to cheat the system." In the fixed income space, I rate my peers highly, and they are all generally very experienced. The industry itself, I do feel however, can be rather bureaucratic - especially amongst the larger firms, and this manifests itself in the tendency for equity funds to eventually become closet index-trackers. What I do not like is the tendency - especially in the hedge fund part of the industry - to overcharge clients by charging both a fixed fee as well as a performance fee. Whilst this is a generally accepted global phenomenon, it is the manner in which it is done - by using a very low hurdle, such as the cash rate, as the level beyond which performance fees accrue. I think that is outrageous, and clients would be right to complain, as it tarnishes the image of the industry. Beyond that, asset managers could and should do more to embrace the challenges inherent in the South African context - especially the socio-economic ones.

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