Meet the Manager: Real Return’s Suzanne Hutchins

A one-on-one with Suzanne Hutchins, portfolio manager on the Real Return team.

How did you end up pursuing investing as a career?

I started as a global analyst, researching equities among a team of three others. We would identify global opportunities, across industries, and create a model portfolio of ideas that portfolio managers would put to work. After completing investment certifications, I progressed and eventually shadowing a manager who was keen to train some younger employees before retirement. He was meticulous, detailed and highly disciplined. He also had a lot of experience, having invested through the Japanese market bubble and subsequent crash.

After three or four years with my previous firm – in the 1990s – I was given the opportunity to work directly with Stewart Newton, the founder of the firm, on multi-asset portfolios. As he became less involved in the day-to-day of portfolio management and more focused on the business which he subsequently sold, I began managing his multi-asset portfolios for the client base. At the time, I also worked closely with the CIO and went on to manage the UK equity team in addition to other leadership roles.

What has past experience outside of portfolio management taught you?

As an artist I believe that investing is as much of an art as it is a science. You can learn the science behind it; doing degrees in finance and economics—but I think investing is ultimately about understanding your surroundings and your sensitivity to the ecosystem of the market. This is similar to how your surroundings can inform the art you produce. I believe you need to be open to different developments, which can ultimately shape your view of the world.Just like a painting or sculpture, my investment decisions are a result of my unique understanding of the world around me.

What was your first foray into fixed income?

I sat in a corner in the investment department for three months quietly taking down pricings from broker- dealers on new issues. I would take scale sheets and put down all of the maturities, coupons and yields with a certain type of heading that was required from the prospectus – and I did this for about three months, gradually taking down secondary offerings and reading prospectuses. I found that broker-dealers were a valuable resource because they really helped train me in the beginning. It was 1987 so we didn’t have Bloomberg at the time. Instead, we had two big Telerate machines where you could see what yields were doing. At the time, most communication with the dealer community was over the phone.

What do you like about working in asset management?

You never stop learning. I remember being an analyst and feeling like I was at university, where there’s free rein to research and generate ideas. What keeps me engaged is the never-ending exploration. The market can be quite humbling but it really does shape you. That’s why experience is so important in this industry. Secondly – you’re constantly tested, which compels you to do better. There’s a drive to be perfect, which isn’t really attainable. Every day, you’re measured by the market, your results, how you perform against your peers, and whether you win or lose a pitch among other criteria. You’re constantly upping your game and that’s what I love about it.

How do you cut through the noise?

There are certain business characteristics that give me more confidence. Given the money I manage is in an unconstrained multi-asset strategy, which is flexible, I can allocate capital where I have the highest conviction. For me, long-term winners tend to have tailwinds of long-term structural growth dynamics, a competitive cost base, and they’re self-financing market leaders, preferably with pricing power among their traits. I don’t much like leverage. If a business is constantly improving its return on investment, making sure returns are greater than its cost of capital, that gives me conviction. Likewise, I think it’s important for businesses to value environmental, social and governance issues in how they conduct their business and treat stakeholders.

Is there a familiar connection between your passions (outside investing) and multi-asset investing?

I think multi-asset investing is kind of like painting a picture. Every component is important to the whole and it may not make much sense viewing any part in isolation. You really need to see the full picture to understand the entire portfolio as well as how each part complements one another. I’ve come across people who think in boxes – in a rules-based fashion, but I don’t think anything about investing is cut-and-dried. I
believe people who think in constraints have trouble understanding the concept of multi-asset investing. Markets are constantly changing and evolving – they are social systems as much as economic, and, just like art they create a picture, an environment that can be constantly in flux. In my opinion, you need perspective to navigate your journey and have an idea of your road map, but still be flexible as market conditions change.

In summary, there isn’t a one-size-fits-all – but for businesses with good tailwinds and structural growth opportunities, I look at their PE multiple relative to other growth prospects, in other words, the PEG ratio. I look for businesses that generate cash and I aim to identify how they’re allocating that cash; if they’re reinvesting back into the business; if they’re allocating capital efficiently; whether or not they’re paying back shareholders with dividends, and if they’re buying back their own shares. Analyzing cash management is key in terms of assessing the viability of capital allocation decisions within a business. Cash is cash.The ‘E’ (= earnings) can always get manipulated. However, great companies exist within the start-up universe that don’t pay dividends. There isn’t one rule that applies to all businesses; it varies stock-by-stock.

IMPORTANT INFORMATION: Not for further distribution. This is a financial promotion and is not investment advice. Any views and opinions are those of the investment manager, unless otherwise noted. The value of investment can fall. Investors may not get back the amount invested. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its subsidiaries. In Hong Kong, the issuer of this document is BNY Mellon Investment Management Hong Kong Limited, which is registered with the Securities and Futures Commission (Central Entity Number: AQI762). BNY Mellon Investment Management Hong Kong Limited and any other BNY Mellon entity mentioned are ultimately owned by The Bank of New York Mellon Corporation. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its subsidiaries. In Singapore this document is issued by BNY Mellon Investment Management Singapore Pte. Limited, Co. Reg. 201230427E. Regulated by the Monetary Authority of Singapore (MAS). This advertisement has not been reviewed by the Monetary Authority of Singapore. BNY Mellon Investment Management Hong Kong Limited and any other BNY Mellon entity(ies) mentioned are ultimately owned by The Bank of New York Mellon Corporation. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its subsidiaries. If this document is used or distributed in Australia, it is issued by BNY Mellon Investment Management Australia Ltd (ABN 56 102 482 815, AFS License No. 227865) located at Level 2, 1 Bligh Street, Sydney, NSW 2000.

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