A CIO overseeing $35 billion explains why he hires former investigative journalists from the New York Times and Wall Street Journal to combat the 'single biggest investment risk with great businesses'
- Matthew Benkendorf, chief investment officer of the $35 billion Vontobel Quality Growth boutique, leans on former investigative journalists from the New York Times and Wall Street Journal to dig up the good, the bad, and the ugly surrounding his investments.
- Benkendorf hires former reporters to articulate situations, provide investment "dossiers," and analyze budding scenarios.
- He's found great success coupling a quality growth approach to investing with an emphasis on fighting complacency.
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Matthew Benkendorf, chief investment officer of the $35 billion Vontobel Quality Growth boutique, strictly adheres to an investment strategy that's spelled out right in the name of his fund: quality growth.
"It's always breaking down businesses quantitatively and qualitatively into what makes certain ones great and what makes most businesses, quite frankly, average," he said on the "Masters in Business" podcast. "I'm always sort of ranking and contrasting."
Benkendorf has been employing this investment philosophy and strategy for over 20 years now - and he's found great success both domestically and across the globe.
"We're quite proud of our results," he said. "So that style and philosophy has achieved alpha generation in places like Europe, and the US, and emerging markets, and global equities simultaneously."
But just because Benkendorf's fund is thriving doesn't mean he rests on his laurels.
"The single biggest risk to our style is complacency," he said. "So what we've done very successfully to combat complacency - which is the single biggest investment risk with great businesses - is we have three members of our 21 member investment team that are former investigative journalists."
The reasoning behind Benkendorf's appointment of former journalists - some from the the New York Times and Wall Street Journal - to his investment team is simple: to fight complacency.
"I always use the analogy: It's like if you were getting married and you wanted the dossier on your spouse," he said. "You want to know everything. You want to face it; accept it."
Benkendorf says that those same principles are applicable to investing. He wants to know everything about a business. The good, the bad, and the ugly. Knowing this information allows him to calibrate his investments for risk, and size them appropriately within the portfolio.
"They're fact finders. They're devil's advocates. They're there to challenge us day-to-day. They're there to challenge even great businesses over the long term," he said. "We can dedicate a journalist to dig deeper on a singular issue, rather than the analyst get mired down in the fog of war in this one small issue while they accumulate the bigger, broader picture of the underlying company."
He continued: "That's where they can add a lot of value too."
The original idea and allure to incorporate investigative journalists into his investment team came years ago when the news industry was being upended by technology. A swath of journalists were available and looking for work.
Benkendorf realized that these individuals had attributes that applied directly to investment research.
"What reporters clearly do very well in their job is find a subject they often maybe know nothing about and figure it out," he said. "So that was a great analytical skill."
What's more, he notes that some investors have difficultly making and articulating decisions - and that's where reporters shine.
"Everybody can be smart, everybody can find facts, everybody can maybe even put the story together, but can you actually then spit it out and then regurgitate it so someone can do something with the information?" he asked rhetorically.
Benkendorf concluded: "And newspaper reporters, obviously, that's there job, right? They need to put it into a sellable fashion, which means it's articulate - and you need that articulation to be able to make a decision and know what you're dealing with."