Navigating Challenges, Building a Legacy, and Redefining Investment Strategies!

A common belief is that privilege is the path to success. It’s true that some people seem to have greater access to certain opportunities, but it’s important to think about the various stories that influence the state of finance. Fabiana Fedeli is a living example of fortitude, inquisitiveness, and a steadfast work ethic. Her rise from the cobblestone streets of Rome to the top ranks of global finance is a tale of perseverance and a never-ending quest for knowledge. She currently holds the position of Chief Investment Officer, Equities, Multi-Asset, and Sustainability at M&G Investments.

Born and raised in Rome, Italy, Fabiana faced adversity early on. The untimely death of her father when she was just a year and a half old left her and her mother forging ahead as a family of two. Growing up in a society still entrenched in gender-ascribed roles, her upbringing with a single parent rendered her agnostic to societal norms, an invaluable asset in her later career. Financial modesty fueled her drive to excel, propelling her toward a future that defied expectations.

Fedeli’s entry into the world of finance wasn’t a predestined path. A chance encounter with a TV program showcasing opportunities at one of Italy’s premier business universities sparked her interest. Determined and armed with grit, she secured a scholarship, igniting a journey that led her to study in Japan and work across the globe, from the United States to the UK and the Netherlands.

A pivotal chapter in Fedeli’s narrative unfolded in Japan. Driven by a desire to enter academia, she pursued a scholarship that not only covered tuition but also provided for living expenses. Undeterred by the challenge of studying in a language she barely knew, she completed her Master’s and transitioned from academia to a sell-side analyst role in Tokyo, setting the stage for her illustrious career in global finance.

Below are the highlights of the interview:

Could you please tell us about your company and its inception story?

M&G is one of the UK’s oldest asset managers. It was founded in 1901 and launched Europe’s first mutual fund and the UK’s first unit trust in 1931. Today, M&G is an FTSEI 100 company with 5000+ employees, £332 billion of assets under management (as of June 30, 2023), and 500+ investment professionals providing a broad range of investment solutions across asset classes spanning equities, fixed income, multi-asset, private credit, infrastructure, real estate, and alternatives.

In Equities, Multi-Asset, and Sustainability, which are the areas I am responsible for, we have over 150 colleagues. working in the UK, US, Continental Europe, and Asia, with our investment teams managing a combined £58 billion of assets (as of June 30, 2023) and investing across the globe on behalf of our clients.

As active investors, we have a strong in-house proprietary research capability, a long tradition of stewardship, and an ambition to consistently improve our sustainability credentials.

How do you approach investment strategy development and implementation, and what factors do you consider when evaluating potential investment opportunities?

I love my job and feel privileged to do what I do. I could not do it without our clients entrusting us with their savings and their investments. Therefore, clients are at the center of everything we do. When we develop new strategies, we have to make sure that they serve our clients’ needs. Clients’ objectives, risk tolerances, and investment horizons are the key drivers of our investment offering. These needs are evolving, and we have to evolve with them. Times are changing in the asset management industry; clients are becoming increasingly sophisticated and putting a lot of thought into the amount of risk taken to achieve certain returns, as well as the operational soundness supporting an investment strategy and, importantly, the longevity of the portfolio management team. The concept of a “star portfolio manager” is being replaced by a “star team,” where there is a credible and clear ”bench” of talent that can step into the lead portfolio manager’s shoes and minimize key person risk. We also need to ensure that we have the combined skills and capabilities to deliver these solutions to our clients. We should not promise what we cannot deliver.

In terms of identifying attractive investment opportunities, there are three pillars to our investment philosophy: 1) active share, as clients come to us to achieve returns that they cannot derive from passive exposure; 2) in-depth in-house research, which allows us to identify opportunities that may not be evident through a more superficial approach; and 3) sustainability integration and stewardship. We have a long tradition of working collaboratively with the companies we invest in, and the world around us is also evolving. Considerations around sustainability, such as climate change and diversity and inclusion, are necessary to ensure that the companies we invest in remain resilient in a world of constant change.

We don’t follow the herd, even if that can feel uncomfortable at times, particularly during bouts of market volatility. Active decision-making is about seeking opportunities that have the potential to deliver long-term value for our clients and drilling down to fully understand the companies we are investing in. There’s no substitute for in-depth analysis. Next to it, knowing where to best direct our research efforts comes with industry know-how and investment experience.

What was the most important decision you made as a Chief Investment Officer?

As a CIO, I get to manage the most powerful asset: our people. Therefore, my most important investment decisions are about my team. Over the last two and a half years we have worked hard at breaking silos between different investment desks. We have abolished the word “collaboration’’ and replaced it with “accountability”. We are all accountable to each other for sharing best practices and research ideas. Rather than duplicating, we pool resources so that we can invest in the best tools, the best data, and the best technology. A year ago, I hired a California-based technology-focused investment team. It took me a long time to find them. I was looking for clear knowledge of leadership as well as values that would make them part of that “accountability’’ culture. Their arrival has been a catalyst for upgrading the technology know-how of the broader team and has led to the launch of our first Global AI (Artificial Intelligence) strategy.

How do you collaborate with other departments or teams within the organization to align investment strategies with overall business goals?

One of the reasons why I enjoy working at M&G is the size of our organization: we are large enough to have deep expertise and meaningful resources in all major asset classes (Equities, Fixed Income, Private Markets) and yet we are small and nimble enough that there are no barriers for us to work together and innovate horizontally across those asset classes. I can sit with my fixed-income and private asset colleagues and brainstorm on product innovation. I do believe that in the future, our clients will be increasingly interested in cross-asset opportunities where we are able to harvest alpha and manage risk in ways that are less correlated with traditional asset verticals.

An example of cross-team product innovation this year has been between our public and private equity teams. We felt that the market was not taking advantage of opportunities in early-stage unlisted businesses, where significant value could be created by engaging with their management teams, guiding the companies through to IPO, and then continuing to support those businesses post-listing. Therefore, we launched a cross-over strategy that leverages M&G’s broader investment eco-system, combining the early-stage research and origination expertise of our private asset colleagues with our long tradition of market research and company engagement in public assets.

What advice do you have for aspiring Chief Investment Officers or those looking to enter the investment field?

For those looking at a career as investors, humility and resilience are rare, precious, and essential currencies in our line of work. You should never forget that you are safekeeping and growing assets for your clients. Without those clients, you would not be in your seat. And for an aspiring CIO, make sure you create a team of investment professionals with diverse and complementary skill sets, not a collection of clones.

Please give us a few testimonials from your clients and awards or recognition that accurately highlight your achievements in the corporate niche.

Industry recognition:

• Named by Financial News as one of the 100 Most Influential Women in Finance in 2022

Board directorships:

• Non-executive director on the Board of M&G Investments South Africa.
• Non-executive director and Chair of the Audit Committee of Relmada Therapeutics (Nasdaq: RLMD), a late-stage biotechnology company.

Investment committee memberships:

• Member of the Investment Committee of The Investment Association, a trade body representing Investment Managers in the UK who collectively manage over £8.8 trillion in assets.
• Member of the Investment Committee of UK-based The Open University.

Regularly published in print and interviewed on TV and radio:

• Regular broadcast media appearances (Bloomberg, CNBC, Sky) and ongoing dialogues with senior journalists and editors in the UK, Europe, Asia, Africa, and the US provide insights and analysis about how we are navigating markets on behalf of our clients.