This week we continue our conversation with Niels Bodenheim, senior director of debt research for bfinance. bfinance is an investment consultant that specializes in the implementation of investment strategy, including fund manager research and selection, customized portfolio design, monitoring and fee analysis.
Previously Niels was executive director at Mubadala GE Capital, the commercial finance joint venture owned by the Government of Abu Dhabi’s investment vehicle, Mubadala and General Electric. Second of two parts – View part one
The Lead Left: Do you depart from the analytic when you assess broader risks and issues?
Niels Bodenheim: It’s educational over several months. Sometimes specifications will be changed and markets will change. Brexit is a good example. How much exposure does the manager have to UK risk? Sometimes the pedigree of the firm is over-weighted. Sometimes expertise in second lien doesn’t translate to first lien.
TLL: Are there macro trends that you consider that might overweigh the strategies?
NB: That’s a very interesting question – economic vs. product driven trends. The biggest risk is the limited number of investments per fund, for example, 30-40. We think macro risks will be more important in certain sectors , such as consumer verticals in gaming, or restaurants. Healthcare has 40-50 sub-segments. There could be macro changes that affect those more than overall trends especially where managers are overweight in sector exposure
We also help clients think about key factors that are more related to event-driven risks. For example, one client was simply opposed to investing in anything related to tobacco or marijuana.