e-fundresearch: Which benchmark do you adhere to?
Gorman: MSCI Europe.
e-fundresearch: Are you also responsible for other funds at the moment?
Gorman: In addition to Pioneer Funds – Core European Equity, I also manage Pioneer Italia Azionario Europa (an Italian domiciled European Equity fund) and a European Equity segregated institutional mandate.
e-fundresearch: What is the total volume that you manage in all your funds?
Gorman: Pioneer Funds – Core European Equity - € 807.0 mil (as at 31 Aug ’10), Pioneer Italia Azionario Europa (€ 720mil), Institutional mandate (€ 32mil)
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2003-2008? Absolutely and relatively to the relevant benchmark?
Gorman:
Performance data provided refers to Class A units only, and is based upon NAV of fees. Past performance does not guarantee and is not indicative of future results.
e-fundresearch: How content are you with your own performance in the last years and this year?
Gorman: Pioneer Funds – Core European Equity outperformed its benchmark, the MSCI Europe Index, in relative terms by 2.4% over 2009. In absolute terms the Portfolio gained 34%. We were very content with that performance thanks to avoiding certain laggard Financials stocks held in the benchmark and benefiting from select holdings which we favour due to strong balance sheets and cash generation. Over the year we continued to increase the number of holdings within the Portfolio following a more diversified Portfolio strategy approach.
We have slightly lagged the benchmark on a year-to-date basis in 2010. We continue to look for attractive investment opportunities, particularly those cheap names which are undervalued as a result of the macroeconomic situation. We also favour names which can offset domestic weakness by exposure to global growth and Emerging Markets.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Gorman: We aim to invest in attractively-valued companies possessing identifiable strategic advantages with superior financial returns demonstrating strong earnings potential not yet fully recognised in the market…while mindful of the macro-environment for the stock and sector.
Investment approach is primarily individual stock focussed but macro considerations can and will inform sector and thematic positioning. By virtue of its competitive positioning and management execution a company displays a Strategic Advantage. The fundamental valuation analysis shows evidence of Rating Advantage compared to historical and peer comparisons. We look for companies with a sustainable Return Advantage on the utilisation of invested capital. We generally seek stocks with a favourable Price and Earnings Trend Advantage demonstrating recognition by the market of the improving profit expectations.
e-fundresearch: How long have you been a fund manager already?
Gorman: I have experience of managing both fixed income and equity products at Pioneer Investments and have over 23 years´ experience working with both asset classes.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
Gorman: Fund management is a very cyclical business so today’s success can be tomorrows disappointment. I prefer to focus on trying to pick successful stocks for the longer term and forget about the disappointments as soon a possible!
e-fundreseach: What kind of capital market situation do we have at the moment? How do you act in this environment?
Gorman: I think we are in a very different market environment as economies and individuals adapt to the normalization of credit conditions (price and supply) post the excesses seen in the earlier part of the decade. This suggests a period of lower economic growth with obvious implications for equity market returns. As such, I retain a somewhat cautious approach and prefer to look at companies that have genuine growth opportunities and/or can reward shareholders through dividend growth. Thankfully the corporate sector seems in be better financial health and the market volatility will provide opportunities to buy good companies at attractive valuations.
e-fundresearch: What are the special challenges in this environment?
Gorman: I see the volatility in all asset markets as the major challenge especially for equity markets given the poor relative performance over the past 10-15 years.
e-fundresearch: What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?
Gorman:
- We will continue to seek out quality franchises with under-appreciated prospects at reasonable valuations.
- We hope to be able to focus more on single company fundamentals than on the larger macro/market as in 2008-2009.
- A return to stock picking should favour our equity selection approach, which emphasises researching and meeting with companies and determining their intrinsic value over a medium-term horizon using fundamental analysis.
- In a lower, potentially weaker, GDP environment we expect those companies that can deliver genuine top-line growth to be afforded a market premium.
- We also see enhanced attraction in stocks that can offer secure and/or growing dividend streams.
e-fundresearch: Do you model yourself on someone? Any ideals?
Gorman: I admire and enjoy following the views of many great investors such as Warren Buffett, Jeremy Grantham, Bill Gross, Howard Marks.
e-fundresearch: What motivates you in your job?
Gorman: Portfolio managers are fortunate to work in an environment that is constantly changing and where we are continually learning. Just keeping on top of market developments is interesting but trying to make informed and, hopefully, successful investment decisions is the major motivation.
e-fundresearch: What else do you want to achieve or do you have any further aims as a fund manager?
Gorman: I hope to continue to enjoy this interesting (but demanding) role.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Gorman: I am fortunate that I have only ever worked as a Portfolio Manager. Apart from this I would love to have been good enough to pursue my love of sports (especially Rugby and Hurling).
e-fundresearch: Thank you for the interview!
