Meeting Jenny Sheehy, Fixed Income Portfolio Manager, Futuregrowth Asset Management

Q: How did you get involved in financial services?

A: I started studying actuarial science at university and worked in the actuarial development department of a large insurance company. Of all the actuarial exams, the investment modules were the most interesting. After travelling overseas I looked for a job in investments and started doing fixed income research for the Investments Department of Old Mutual from 1989, followed by fixed income portfolio management from 1994. Old Mutual bought Futuregrowth in 2008 and since then I have been based at Futuregrowth in Newlands as a fixed income portfolio manager.

Q: When did you make your first investment and do you still have it?

A: I invested in a futures contract indexed to the dollar gold price in 1990. Although this is a short term investment and one is only required to place a margin upfront, one has full exposure to the movements in the price of the underlying instrument until the contract expires. This proved to be a useful experience to gain knowledge of the mechanics of the derivatives market early on in my career.

Q: How should institutions and retail investors use a cash investment?

A: Institutions and retail investors should use a cash or fixed income investment as part of their investment portfolio. Their overall portfolio should be well diversified with equity, property and offshore investments in addition to bonds and cash. Weights across the various asset classes will depend on the investor’s risk appetite and cashflow requirements.

Q: Are you concerned about inflation locally and / or globally in 2012?

A: With global growth expected to continue recovering slowly in 2012, I would not be overly concerned about global inflation in 2012. Although local inflation is currently increasing and is above the upper band of the inflation target of 6.0%, it is expected to trend lower during the second half of 2012. The risks to this outlook are to the upside with potential volatility from food and oil prices as well as from the rand.

Q: What do investors need to know about their cash managers?

A: Investors need to be comfortable with the investment strategy and philosophy of their cash managers. They need to research the performance of their cash managers under different market conditions with particular emphasis on their long-term performance track record. Equally important is a thorough investigation into the level of risk taken as well as whether the investor’s liquidity requirements are being met.

Q: What is your best cash management / investment tip?

A: Do a thorough investigation of your investment manager before making any investments. Be wary of being promised excessive returns as this often means that risks are also excessive.