Saker Nusseibeh takes his responsibilities seriously — not only as CEO of Hermes Fund Managers, but as a representative of the money management industry.
The responsibility concern is at Hermes' core and can be attributed in part to Mr. Nusseibeh's strong views on what makes a money manager, and in part to Hermes' unique ownership structure, which “gives us a different view of the world to others.” Hermes' owner is the London-based BT Pension Scheme, which has about £40 billion ($67.8 billion) of assets. About 77% of the money manager's assets under management are run on behalf of BTPS, which is one of the U.K.'s biggest defined benefit funds.
“We build products for the pension scheme, and we are part of that group. We genuinely understand long-term needs. Most fund managers think of long term as in the next one to three years. We understand that long term is 30 years,” he said.
While talking to Mr. Nusseibeh in an office at the firm's headquarters near the Tower of London, his sense of responsibility to the 320,000 participants and retirees who worked with BT Group is palpable.
Participants who will retire with probably less than £10,000 “will look at me and say "What are you doing with my money?'” he said.
Mr. Nusseibeh is also chairman of the 300 Club, a global group of investment executives that aims “to respond to an urgent need to raise uncomfortable and fundamental questions about the very foundations of the investment industry and investing,” according to its website.
“There is a disconnect in fund management — managers believe that when they win a mandate, it is from a large corporate entity. We understand that when we win a mandate, we are taking money from normal people — pay attention, because it matters,” said Mr. Nusseibeh.
Money management “can be, if you choose so, a noble pursuit. It can also be an ignoble and useless profession — but it is up to us.”
He thinks money managers must take some blame for the 2008 financial crisis. “When we look at why 2008 failed, we can blame the bankers — and quite rightly, as they took the risk. We can blame regulators, as they were blind to the risk. We can blame politicians, as they turned a blind eye to something that they saw as complicated. But we can also blame fund managers, for although we were not responsible for these things, we are the analysts. We should have thought longer and harder about the things being said by the investment bankers. We should have been more vociferous over the points that troubled us, and made our concerns public.”
The active money manager is also communicating its views on responsible investment to the wider industry, with January research showing that well-governed companies had outperformed poorly governed counterparts by 30 basis points on average per month since the beginning of 2009.
“It turns out that being a responsible investor is financially sensible,” he said.
That responsibility doesn't end with investment in companies, but extends to investment in people and the surrounding community. “We have outreach programs, taking interns from this area. We have mentoring programs and are also involved in the Mosaic charity (which creates opportunities for young people in deprived communities.) This is our community. Our office is based at the edge of the poorer parts of Whitechapel and East London, and the richest neighboring boroughs. There is a huge pool of talent that needs to be unlocked.”
