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Impact & Insights

Impact & Insights

Blueprint for Success: A Q&A with BAM Global Head of Equities Jeff Runnfeldt

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To use a football analogy, we've had a steady ground game. It's been pretty steady performance month to month, and without any real dramatic highs or lows. I'd attribute a lot of that to the increased diversification of the business.

Blueprint for Success: A Q&A with BAM Global Head of Equities Jeff Runnfeldt

By: BAM Team

 

At Bank of America’s 2020 Japan Hedge Fund Forum this month, BAM’s Global Head of Equities, Jeff Runnfeldt, participated in a virtual Q&A session led by BAM co-founder Scott Schroeder.

Jeff, whose equities group oversees two-thirds of BAM's $8 billion in assets under management, discussed his investment approach, BAM’s evolution, and his outlook on the markets in the final quarter of 2020 and beyond.

Here are excerpts from that discussion:

 

Scott: Jeff, how would you deconstruct our performance this year?

 

Jeff: To use a football analogy, we've had a steady ground game. It's been pretty steady performance month to month, and without any real dramatic highs or lows. I'd attribute a lot of that to the increased diversification of the business.

 

Today, we have so many more teams contributing to our results. It's not like there's any one team that's driven our performance, or even three teams. It's really a combination of teams. It's been a focus on diversification across strategies.

 

S: What are the biggest changes that have driven our performance?

 

J: BAM had a great business before I got here, but we've made a lot of dramatic changes in the last 18 to 24 months that we implemented throughout the organization. Nothing revolutionary from a process standpoint, just a greater emphasis on discipline. We have focused a lot on risk management and portfolio construction.

 

But far and away, the most important change we've made is on the personnel front. We parted ways with a lot of good people, but we needed people with different skill sets.

 

I'm very proud of the job we've done with the people we brought in. It's inspiring to work with a group of absolute "A" players. We want people who, day in and day out, honor and value the seats they occupy. And I'm lucky to work with a great senior team.

 

S: I agree we've hired some significant talent over the past 18 months. How are we positioned to win the talent race?

 

J: It's People, with a capital "P." That drives everything. As I tell young analysts, your first or second hire is going to be your most important. If you go out and hire some young kid out of school because they have one differentiated skill, nobody will notice. Whereas, if you hire people who are well respected by their peers, everybody notices. We hired some exceptional portfolio managers in '18 and '19, and it gave us a lot of momentum. When you assemble a team of "A" players, other "A" players want to be part of it.

 

S: Let's turn to the markets, which have been volatile. Everyone expects them to remain volatile. Are you thinking about changing your risk style, perhaps play more defense? And how do you approach the last quarter?

 

J: Volatility was off the charts in March, and everyone was saying you should take risk off. That would have been a bad idea. To use another football analogy, I can't stand the prevent defense. It never works.

 

The most frustrating time in this business was the six, seven years we had prior to this. Volatility was low, and everybody leveraged up to generate returns. Now we have high volatility, and you don't need to leverage. Stocks are moving. As I tell our people, "Folks, this is prime time!" If you're an investment pro, this is what you live for.

 

I think we just stay on our front foot and play our game. We may make adjustments on the margin, but you won't see holistic changes in our approach.

 

S: Last question – what gets you excited to get up and go to work every day?

 

J: What really excites me is the intellectual stimulation of working with the best people. The folks at BAM are at the forefront of their industries. I am fortunate to collaborate with such exceptional people.

 

That is the best thing about this job, day in and day out.