"Strive not to be a success, but to be of value" – Albert Einstein
I rounded off Q2 with a week in London, meeting with a number of equity managers that adopt a Value style of investing. Growth-oriented managers have been cream of the crop in recent years, with Value managers generally struggling against their market benchmarks and ultimately falling out of favour with many investors. It is near on impossible to predict when there will be a rotation from Growth to Value stocks (don’t let anyone tell you otherwise!), but the managers I met with generally made a compelling case for their investment philosophy and portfolio holdings.
This got me thinking about Enhance, not as an investment opportunity per se but rather about our value proposition to clients. Striving to be commercially successful fundamentally underpins the strategic decisions and management of most businesses, but I firmly believe that if you can demonstrate genuine value to clients then commercial success will invariably follow. Albert Einstein had a point when he said “strive not to be a success, but to be of value”, as did Warren Buffet when musing that “price is what you pay, value is what you get”.
I have waxed lyrical previously about Enhance’s independence, with 100% of our group revenue being generated by our investment monitoring and advice services to fiduciaries, family offices and charities. We receive no fee income from the investment management industry whatsoever and have specifically positioned Portfolio and Consultancy as third-party manager selection propositions – so, we can credibly and objectively monitor the investment arrangements of our clients and propose change to other best-in-class investment solutions where it makes sense to do so. No conflicts or compromises, independence is key to our value.
To aide our independence and expand our investment research coverage, I am pleased to say that we have recently partnered with a leading Fintech business to help streamline and automate our research interactions with the investment community. The beauty of independence is freedom from conflict, but the challenge of independence is how to assess a truly global opportunity set to provide informed investment oversight and advice. More information will follow later in July on this partnership, but it will ultimately mean that we can exponentially increase the number of investment providers we assess through our 5P research framework and in so doing identify a larger number of viable investment opportunities for our clients.
If I look at the operations of our business in a little more detail, I can also see that we are evolving in line with client feedback. A good example of this is our investment into establishing a Project Management Office (PMO), tasked very specifically with onboarding new fiduciary businesses into our range of services. This is a service that we do not charge clients for and instead absorb the overhead on the basis that a good onboarding journey and getting things right initially will lead to a longer and more productive relationship. Our PMO is somewhat unique in our industry and has already delivered considerable operational efficiencies to firms that have chosen to employ Enhance’s services. We have invested to make working with Enhance easier.
Another aspect of our value proposition that sets Enhance apart is the approach to investment monitoring we are building for the fiduciary use case. Not only does Enhance independently benchmark investment portfolios and provide a broad range of insightful statistics on how an investment manager is performing from a return and risk perspective, we are also building out a range of standard ‘checks and balances’ for each portfolio we monitor. Such ‘checks and balances’ can be prescribed by Enhance or instructed by our fiduciary clients and creates a quasi-compliance framework for the monitoring of investment accounts that directly address fiduciary investment responsibilities. Again, more news to follow on this development later in the year.
More generally, Q2 was another busy quarter at Enhance where we have welcomed a number of new staff and have more on the way. We are trying to grow using a combination of quality people and technology so our headcount is not a particularly accurate measure of our success, but it is always nice to introduce new skills and personalities into the business. Speculative applications are welcome as we realise that, in the same way that lightning doesn’t strike twice, good people rarely come along at the perfect time – so if you have an interest or experience in investments, data analytics or software development we will be pleased to add you to our talent pipeline. Current vacancies are available here.
Growth brings other challenges, such as providing appropriate office space and equipment for a larger team. In this regard I am pleased to say that we will be upgrading our Jersey HQ in Q4 to a larger premises and this will coincide with the appointment of C5 Alliance – a leading Jersey-based IT consultancy – to overhaul our infrastructure and computer hardware to ensure our staff operate from the latest and most performant technology platform possible. Both of these changes are big investments, but we will continue to reinvest profits back into our business for the foreseeable future to deliver better services, technology and people to our clients.
This journey is really only just beginning.