Get to know your Portfolio Manager | Q&A with Wouter van der Merwe

For our latest instalment of the "Get to Know Your Portfolio Manager" series, I had the distinct pleasure of sitting down with Wouter van der Merwe for an engaging Q&A session at the Sasfin Wealth Stellenbosch office. The aftermath of the recent heavy storms in the region provided a poignant backdrop, serving as a vivid reminder of the unpredictability that nature—and by extension, the world of investing—can bring. This juxtaposition set the stage for a captivating conversation that delved into the intricacies and challenges of navigating the ever-evolving landscape of finance and portfolio management.

Q: Let's start with an introduction. Can you tell us a bit about yourself and how you got into the world of finance and portfolio management?

Wouter: My journey into finance was quite unexpected, actually. It wasn't until my third year of studying B.Comm Financial Management that I stumbled upon my innate curiosity for understanding how companies generate their revenue. The thrill of being able to invest in the outcomes of my research truly excited me. So, I pursued further studies, completing my Honours in Financial Economics & Investment Management and obtaining my CFA Charter.

After that, I took a leap of faith and dove straight into the workforce, landing in the bustling CBD of Johannesburg

For a year, I worked as a Business Analyst, gaining valuable insights into the inner workings of businesses. But the allure of portfolio management beckoned, and I eventually made the transition to join the Sasfin Wealth team in Pretoria, under the leadership of Duncan Studer, who is now my partner in our business unit—a decision I made exactly ten years ago. It's been an incredible journey filled with challenges and triumphs, and I'm grateful for every step of it.

Q: What's a typical day like for you as a portfolio manager?

Wouter: I thrive on routine, so my day typically begins with two essentials: coffee and exercise. That first sip of coffee and my morning workout set the tone for the day ahead, providing me with the energy and clarity I need to tackle whatever challenges come my way.

As I commute to work, I dive into a podcast, eager to absorb the latest insights and perspectives on market trends and economic developments. It's a ritual that not only keeps me informed but also primes my mind for the dynamic environment awaiting me at the office.

Once I arrive, in contradiction with my comments about routine, it's time to embrace the unpredictable nature of the market. Each day brings new opportunities and obstacles, ensuring that no two days are ever the same. It's this ever-changing landscape that keeps me on my toes and fuels my passion for portfolio management.

Q: What do you enjoy most about your role as a portfolio manager?

Wouter: What I find most rewarding about my role as a portfolio manager is witnessing the long-term impact of sound investment strategies. As Elon Musk eloquently put it, “The tricky thing about predicting things when there is an exponential is that an exponential looks linear close-up. But actually, it's not linear”. For me, this directly translates into the 8th wonder of the world, compounded interest, often difficult to grasp at the onset, but astonishing once you look back at a portfolio after 10-15 years of compounding.

When I see clients reflecting on their investments after a decade or more, witnessing the tangible results of their patience and discipline, it makes every moment of market stress worthwhile. It's this ability to make a lasting positive impact on our clients' financial futures that truly fuels my passion for portfolio management.

Q: Can you tell us about a time when an investment didn't go as planned, and what you learned from that experience?

Wouter: There have been instances where investments didn't unfold as planned, and each experience has been a valuable learning opportunity. I've made it a habit to document these lessons in a notebook, allowing me to glean insights and grow from each setback.

One notable instance was when I encountered a challenging investment scenario that deviated from our initial expectations. It served as a stark reminder of the importance of thorough research and diligence before making investment decisions. From this experience, I learned several key lessons that have since become guiding principles in my approach:

Firstly, I realized the folly of attempting to catch a falling knife — risking the foundation of a portfolio can lead to significant setbacks that are challenging to recover from. Instead, I've learned to prioritize the preservation of capital and focus on compounding returns over the long term. It requires a 100% recovery after a 50% decline, a simple 10% off a base of 100% is much easier.

Secondly, I gained a deeper appreciation for the value of long-term quality over short-term euphoria. In the face of market volatility and short-term fluctuations, it's essential to maintain a steadfast focus on the underlying quality of investments.

Lastly, I recognized the tendency of the market to overreact, both on the upside and downside. This underscored the importance of conducting thorough due diligence and maintaining a disciplined approach, ensuring that emotions don't cloud judgment during turbulent times.

By internalizing these lessons and incorporating them into my investment strategy, I've grown as a portfolio manager and honed my ability to navigate the complexities of the market with confidence and resilience.

Q: How do you stay informed about market trends and economic developments?

Wouter: One of my favourite methods is immersing myself in market or company-specific podcasts during my commute or travels. It's a convenient way to stay up to date on the latest insights and perspectives from industry experts.

Additionally, I have a liking for delving into hard copy biographies of industry legends and global entrepreneurs, looking for the “secret recipe” to success, I am starting to think that the answer might be to keep on reading…

Ultimately, I believe in the power of continuous learning and intellectual curiosity. By remaining open to new ideas and perspectives, I strive to expand my understanding of the market and refine my investment approach. After all, in an ever-evolving landscape, the pursuit of knowledge is paramount.

Q: What qualities do you think are essential for success in portfolio management?

Wouter: Reflecting on my journey in portfolio management, I've come to recognize several qualities that I believe are indispensable for success in this field. Firstly, endless curiosity fuels the constant quest for knowledge and understanding of market dynamics, enabling me to stay ahead of the curve and identify emerging opportunities.

Secondly, adaptability is crucial, especially in a landscape as dynamic and unpredictable as the financial markets. Whether it's navigating market volatility or adjusting investment strategies in response to changing circumstances, the ability to pivot and evolve is essential for maintaining a competitive edge.

Lastly, a strong focus on relationships is paramount. Building and nurturing meaningful connections with clients, colleagues, and industry peers fosters trust and collaboration, which are invaluable assets in portfolio management. By fostering open communication and understanding each individual's unique needs and objectives, I'm better equipped to deliver tailored solutions and drive success for all stakeholders.

Q: What advice would you give to someone aspiring to become a portfolio manager?

Wouter: I'd say it boils down to two key principles: diligence and conviction.

Firstly, never underestimate the importance of thorough research and analysis. Before making any investment decision, immerse yourself in the data, scrutinize the financials, and understand the market dynamics at play. This groundwork forms the foundation of sound investment strategies and mitigates unnecessary risks.

Secondly, always have a viewpoint—and be prepared to defend it. In the world of portfolio management, having conviction in your investment thesis is paramount. Whether you're bullish or bearish on a particular stock or sector, back your perspective with solid reasoning and a deep understanding of the underlying factors driving your decision.

Ultimately, portfolio management is as much an art as it is a science. By diligently doing your homework and confidently expressing your views, you'll not only excel in your role but also contribute to the collective wisdom of the investment community.

Q: Outside of work, what are some of your hobbies or interests?

Wouter: Outside of work, you'll often find me immersed in the great outdoors, pursuing a variety of hobbies. From metal detecting in the historical warzones of Vietnam, to embarking on dog sledding camping trips in Sweden, where I can fully engage myself in the pristine wilderness and experience the thrill of navigating challenging terrain.

I also have a deep-seated love for spearfishing in the deep blue waters off the coast of Mozambique.

My outdoor hobbies serve as a source of rejuvenation and inspiration, allowing me to recharge both physically and mentally. They remind me of the importance of embracing adventure and seeking new experiences outside of the confines of the office.

Q: What do you think sets Sasfin Wealth apart from others in the industry?

Wouter: I believe what truly sets us apart is our commitment to personalised, boutique services, focusing on the individual or family, not on a generic mass market product. We understand that each client is unique, with distinct financial goals, aspirations, and concerns.

Q: Finally, what motivates you to excel in your role every day?

Wouter: Ultimately, it is the relentless pursuit of personal growth and the sense of accountability that comes with it. The realisation that I have the opportunity to learn something new each day, to expand my knowledge and expertise, is incredibly motivating.

I thrive on challenge. The knowledge that I am the master of my own destiny, responsible for my own success or failure, pushes me to continually strive for excellence. It's this sense of ownership and autonomy that drives me to overcome obstacles, push boundaries, and constantly raise the bar for myself.

Conclusion

As I looked out the window after our conversation, I couldn't help but notice the resilience of those picking up the pieces left behind by the recent storm. It was a timely reminder that while we may not have control over every circumstance, we do have the power to adapt and grow. Engaging with Wouter left me feeling inspired and invigorated, reaffirming the importance of continuous learning in navigating life's uncertainties. Knowledge, as I was reminded, is not just a tool—it's a beacon that empowers us to make informed decisions and find clarity amidst the chaos of the world around us.