Recently appointed as head of Global Equities at Threadneedle in December, Davies was head of European Equities for 12 years, during which time he oversaw a period of very strong performance and significant growth in assets by €5.5bn.
Davies’ team manages around €11bn and has achieved outstanding performance across its range of funds, with 100% of Threadneedle’s European equity funds having outperformed their relevant benchmark over one year, over three years and over five years (at 31 October 2011, weighted by current assets under management).
Davies’ current focus is getting up to speed with the number of different companies that Threadneedle follows on a global basis and making sure that the global equities team runs as efficiently as possible.
An early riser, Davies is in the office by 7.30 am every day, keen to talk to the Threadneedle dealers (who have already been at work for over an hour) about what has happened overnight in the markets, what the news flow is and how they expect markets to open.
Davies also enjoys mentoring junior members of the Threadneedle team: "The thing which I derive the most pride from is hiring people at a junior level and seeing them develop, take on responsibility themselves, and be successful. Building a successful team is what I enjoy hugely."
It is this joy of building a successful team that Davies accredits with his success: "[I enjoy] having a great team around me and, amongst that team, having people with very differing qualities so we don’t have clones, but people who can bring something different to the party, taking heed of advice and different opinions from the team. As a fund manager, ultimately, you have to make the decision, but there’s a lot of help around you. So, by surrounding yourself with good people, you have a much better chance of doing well."
He also learned some lessons in his early career that helped him become the fund manager he is today. The main lesson: take a broader view of events. "I learned to take heed of the broad environment around us," he says. "So, not just to accept what companies or those with a short-term disposition may be saying, but to look to the long-term and try to be able to see the wood for the trees."
Davies believes pension fund managers can also learn from this and should look to the long-term before making any decisions. "Don’t just look at the news momentum within the world at the time. Look at valuations as well, because valuations can get significantly out of line. Ultimately, there’s mean reversion."
He also notes that pension fund managers should also bear the long-term in mind when selecting fund managers: "You should look at the long-term track record of a fund manager, the style of a particular investor, the consistency of their returns. If the consistency is not there, as a plan sponsor, you have to ask yourself whether or not you can take that inconsistency, those ups and downs, because the scourge of the sector is to hire someone after they have just performed well and then to sack them after they have performed badly. That can be very damaging for returns."
Fund managers who talk about making "easy money" also get on Davies’ nerves: "When people say that easy money has been made now, [it’s annoying]. They never say that easy money is about to be made. It annoys me intensely, because the people who say that were never around to talk about making that particular investment at the time. What they call the ‘easy’ money is normally the most difficult money to be made because it requires doing something which is often against the grain."
When he was young, Davies did not always see himself becoming a fund manager: "I wanted to be a pilot at some point when I was young, but I couldn’t due to my eyesight. I studied economics at university. There was an investment analysis course as part of the degree, which I enjoyed most and led me to apply to asset managers."
In his spare time, Davies is also keen on both watching and playing sports. He says: "I used to play a bit of hockey and tennis. No more hockey now, but I play a bit of golf and I enjoy watching sports as well. I am looking forward to attending some of the Olympics events this summer. I have tickets for the table tennis, which I have never seen before in a competition."
2012 also brings plans for Davies other than Olympics attendance. This year he plans to broaden his expertise in bottom-up coverage of companies on a global basis.
In the more distant future, Davies is keen to continue growing in his career at Threadneedle and is a big believer in the team he has in place: "We have very talented people. We deliver pretty consistent outperformance and I believe that we can continue to deliver that. My aim is also to enjoy myself doing what I do. It is easier to enjoy yourself when you’re being successful because then, you are looking forward to things. So, it is my aim to outperform for our clients and being successful, as it opens up a slew of opportunities."