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Top managers on their biggest regrets of 2012

We quizzed a number of leading managers across a range of asset classes on their biggest investment regrets of the past year.

2012's biggest regrets

Citywire Global spoke to four top performing managers from across a range of asset classes about their biggest regret of 2012. The clock can’t be turned back, but their regrets are recorded here.

Among the things they lament the most are not buying Italian bonds, holding too little high yield and being too bearish on emerging market currencies.

From emerging market fixed income to financial stocks, these top rated managers reveal the biggest headaches of the last year and the nightmare scenarios they expect in the next.

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Sandor Steverink, DeltaLloyd AM

Steverink is Euro Stars A-rated and manages the Delta Lloyd L Bond Euro B Cap fund.

CWG: What was your most stressful day as a fund manager in 2012 and why?

2012 did not bring huge amounts of stress compared to the last few years, where we got used to bankruptcy of banks and dramatic drops in rates and sovereign bonds. If there was any sign of market stress, then May 31 was the day that interest rates dropped to record lows and the world looked like one big Japan.

CWG: Which trade in 2012 do you wish you would have done, but didn’t?

That is an easy one. For a bond investor Italian bonds were the place to be with hindsight and with an Italian heading the ECB, it was possible to forecast that.

CWG: What’s your New Year’s resolution in fund management?

My New Year’s resolution in fund management is to keep telling my clients about the scenario they do not want to hear about, but have to be aware of.

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Mike Riddell, M&G Investments

Mike Riddell is Citywire AAA-rated and manages the M&G Index-Linked Bond A Inc fund.

CWG: What was your most stressful day as a fund manager in 2012 and why?

January 20th. Our entire team had spent the last three years being massive bears on the Eurozone, and especially peripheral Eurozone sovereign and bank debt. Changing a long held structural view is immensely difficult, and I had been tearing what's left of my hair out for the previous two weeks as I watched peripheral sovereigns start to rally on the back of the three year LTRO that began in December.

CWG: Which trade in 2012 do you wish you would have done, but didn’t?

I'd have to go for Emerging Europe FX, and specifically the Hungarian Forint, the Polish Zloty and the Turkish Lira, which have been the three best performing currencies in the world this year. The currencies and their bond markets confounded expectations and rallied strongly primarily on the back of enormous hot money flows that were hunting for anything with yield. The stellar performance of these markets this year hasn't changed my views though and these views are now, if anything stronger - Eastern Europe in particular is extremely vulnerable to the hot money flowing out again.

CWG: What’s your New Year’s resolution in fund management?

Get fully up to speed with some of the more complex derivative strategies. People normally think 'derivatives' and get scared, but I'm more interested in using derivatives to hedge against some of the tail risks. After a long period of low volatility, I think markets are being far too complacent about some extreme outcomes, particularly in the FX markets. Derivatives make it possible to hedge against extreme outcomes, and if these outcomes actually occur then clients could actually make money.

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John Yakas, Polar Capital

Yakas is manager of the Polar Capital Asian Financials fund.

CWG: What was your most stressful day as a fund manager in 2012 and why?

Though financial stocks are up strongly in 2012, it still feels that I am fire-fighting a storm of news almost every week.

CWG: Which trade in 2012 do you wish you would have done, but didn’t?

Buying Indian banks early in the year.

CWG: What’s your New Year’s resolution in fund management?

To stay focused - probably the most difficult thing to do as a financials sector fund manager in view of constant news coverage of the sector and yet probably the best advice for future performance.

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Chris Bullock, Henderson GI

Bullock is Euro Stars AAA-rated and manages the Henderson HF Euro Corporate Bond A2 fund.

CWG: What was your most stressful day as a fund manager in 2012 and why?

Tricky one, but on balance launch day of the new Euro High Yield fund on Nov 19 wins it – launching a fund is always a relatively stressful experience, even more so if it is in the middle of an illiquid rallying market!

CWG: Which trade in 2012 do you wish you would have done, but didn’t?

I wish I’d owned more high yield, and for a lot longer (we sold down into Q2 expecting sovereign concerns to impact the HY market – the rest is history).

CWG: What’s your New Year’s resolution in fund management?

My New Year’s resolution in fund management is to... stop making predictions for the following year, they’re always wrong, yet we never learn...

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