Embracing humility in uncertain times

By: Mohamed Mayet, CEO and Co-CIO, Sentio Capital

Mohamed Mayet

In investment management, we often hear tales of triumph, strategies that yield exceptional returns, and sagas of financial wizards who navigated the markets with infallible precision. Yet, for those of us who live in the real world of asset management, we understand this isn’t always the case. One of the guiding investment principles of Sentio, since its inception 17 years ago, was humility. In our view, humility results in better alpha over time as it aligns fund manager psychology with reality. That said, it’s a humbling experience to admit when we’ve missed the mark, and 2023 has been one of those years for us at Sentio.

In keeping with our ethos of humility, I feel a responsibility to celebrate our victories and openly acknowledge our areas for improvement. Our performance this year has been a humbling reminder of the fallibility of investment managers and the schizophrenic nature of markets. Our philosophy is one of innovative investment methodologies that need to adapt to dynamic market conditions. We have always said to clients that markets are becoming more volatile and dynamic, and investing is no longer just about conviction (the common buzzword in investment circles) but also about innovation and technology.

We have some of the smartest minds in the industry and some of the best technology in the market. However, we must confess that the outcomes have not matched our aspirations this year. This is largely due to our views and positions not playing out as expected, despite the investment in people and innovation.

So, what went wrong in 2023?

The sudden shifts in the dynamics of the global economy, characterised by unexpected geopolitics, supply chain disruptions and wars, presented challenges that even the most astute investment managers struggled to navigate. This year, we often found ourselves at the crossroads of complex market forces and surprising global and local political leadership policy decisions. We are a data and evidence-based manager, and the sudden shifts in global and domestic landscapes rendered some of our investment calls ineffective. Sometimes, the scientific aspects of investing are negated by the erratic behaviour of investors. During this time, we bid farewell to some team members and welcomed a few new members. In these moments of vulnerability, we recognised the importance of staying rooted in our principles and investment philosophy while being agile in our strategies. But we firmly believe that change is often an energiser of philosophy, and currently, the energy in our team is palpable.

We believe the true test of resilience lies in the ability to learn from setbacks, adapt to evolving dynamics, and persistently strive for improvement. Even our key clients have noted that Sentio tends to emerge from difficult periods with stronger performance and as a better business. Our team recognises this and understands the importance of rebuilding our performance to a standard that we are comfortable with.

We are actively addressing these performance challenges by enhancing our research and technology capabilities, staying attuned to the evolving investment landscape, and continuing to incorporate ESG considerations into our investment decisions. The fact that we were named The Best Islamic Socially Responsible Investor for 2023 by the Global Islamic Financial Awards was an honour and a testament to our commitment to sustainable and responsible investing.

While our performance may have faltered this year, Sentio remains dedicated to delivering long-term value to our clients through positive alpha and sustainable investing principles. Our core values of integrity, transparency and accountability allow us to learn from these valuable lessons, improve from the experience, and remain grateful for the opportunity to be in this vibrant industry.

As I reflect on this year, I am reminded of a quote from my favourite poet, Rumi: “If you are irritated by every rub, how will your mirror be polished?” This year serves as a reminder of the ever-evolving nature of the investment landscape. No one can predict the future with absolute certainty, but we can adapt, learn and evolve to serve our clients better. Investing is a journey filled with peaks and valleys; sometimes, the valleys teach us the most valuable lessons. We want to thank our clients, partners and advisors for their trust and support throughout this journey. Let us emerge from the experiences of 2023 stronger and more resilient, ready to face the future with renewed determination, wisdom and faith.

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