A 35-minute listen.

Ryan Hughes, head of active portfolios at AJ Bell, talks to Gary Shepherd about his 20 years in the industry, and how he’s learned the importance of stepping back from the market noise and focusing on the long term.

While AJ Bell is a long-established name in the platform markets, it’s a relative newcomer in investment management, something Ryan was very conscious of when he joined to head up its first passive portfolio in 2016. He says his team still feels like a start-up business within a broader investment platform.

“We started out with our MPS and our funds with an AMC of 15bps. It makes us one of the lowest cost managers in the market, but when you’re a start-up you haven’t got a legacy book of business to protect and think about so you can think very carefully about how you cut your cloth and where you want to put your expenses.”

He adds: “As an investment team we realised we spent many hours of our investment life wasted sat in investment committees deciding whether we should have 9.5% in Japan or 9.7% in Japan. Frankly, we concluded that it doesn’t make that much difference in the long run and so we should only think about doing tactical asset allocation where we can see real value over the medium term rather than this constant tinkering with portfolios.”

“People are acutely aware of transaction costs these days that they perhaps weren’t before, so it’s really trying to think about from a total cost of ownership perspective and thinking about where we can add the most value. Getting our long-term asset allocation and manager selection right and not tweaking and fiddling with the portfolio on a constant basis.”

When advisers ask him about his job, Ryan says his “flippant” answer is that some of his best days at work he’s ever had are when he does “nothing”.

“There’s a really important message in that when you work in investments there’s a constant temptation to tinker with your portfolio, and actually when markets get very volatile sometimes the best thing to do is just turn off your screen, sit back and go and do something else.

“We want to step back and take a long-term view and avoid the temptation to tinker with the portfolio for the sake of it.”

You can read more about AJ Bell’s ‘Pactive’ offering here. We also gathered together some renowned fund pickers to talk about asset allocation trends and fees, which you can watch here.