Long-term investments are a well-thought-out marathon
At Triglav Skladi, my colleagues and I have an extremely responsible task: we manage the assets entrusted to us by clients through mutual funds, pension funds, or individual management. In return for their trust, we ensure the successful growth of investors' funds. Recently, sustainable investing has become increasingly prominent. On one hand, companies recognise the importance of considering sustainable risks for better business performance, and on the other, client demand for investments that incorporate sustainable aspects is also growing.
Precious trust
Triglav employees, through our work, touch upon very personal areas of our clients' lives. People trust us to financially provide for their loved ones if the worst should happen to them, to stand by them when repairing the roof of their home or treating an injured knee. They also entrust us with their money – to grow it by investing in various assets and ensure them a financially secure future. We are good at this. My colleagues and I ensure that we are not only among the (most) successful managers in Slovenia but also globally. In the biggest crises, we made the right decisions and achieved good returns. What is the recipe? Daily initiative and searching for opportunities. Let me say that assets in Triglav Skladi are not securely invested only because of the safeguards, of which there are many in the financial sector, but primarily because my colleagues and I take our work extremely seriously. In this way, day after day, we justify the trust shown by our clients.
Key to sound management
In our neat and modernly equipped Triglav Skladi premises, there is no trace of the hectic pace depicted in Wall Street films. Here, the atmosphere is calm. Managers monitor market events on their screens, but there is no shouting or nervousness. If you are well-informed about events and calmly accept potential downturns, you can be very successful in investing. Because we want to manage assets successfully with the right approaches and ensure stable returns for our clients, we must be prudent and calm, and certainly not rash. Successful management is not about short-term speculation but about predicting what will happen in the long run. If you master this, you can double or triple your invested money in a decade. Every morning, when the managers gather, as a team we review the latest economic news and company performance reports that we follow. We discuss macroeconomic trends and all possible risks that could materialise. We read information in-depth, connect it and learn from each other.
Making the right decisions at the right time
For example, based on data indicating an autocratic political leadership in China that limits company growth and faces issues with Taiwan, we judged that it would likely be time to reduce investments in Chinese markets. We made that decision some time ago, and it proved correct. Making the right decisions at the right time for buying or selling financial instruments ensures higher returns for Triglav's funds, including the pension fund. Our successful work strengthens the Triglav Group's reputation and good name. Despite our efforts, financial markets can sometimes fluctuate unexpectedly. This happened with the onset of the pandemic. At such times, it's crucial to remain calm, even with the stress – which I personally relieve by spending time in nature and, in recent years, through meditation. This composure is vital for ourselves, for the work we do, and most importantly, for our clients who need reassurance during such periods. In these moments, it's very important that we as managers emotionally detach ourselves and avoid panic. Long-term investing simply isn't an impulsive sprint; it's a marathon.
Investing with a focus on sustainability
Due to climate change, digitalisation, artificial intelligence and a complex social environment, the capital markets are shifting towards more sustainable investing. Financial firms, like our asset management company, are increasingly focusing on incorporating sustainable aspects. This is because of their fundamental fiduciary duty to manage entrusted assets responsibly, carefully and in the best interests of their clients. At Triglav Skladi, we're convinced this approach serves our clients best. We also anticipate a growing demand from both individual and corporate clients for sustainable investment options. We believe that both we, as asset managers, and our clients are just beginning the journey towards a sustainable transformation. For instance, in 2022, under our individual asset management division, we offered clients a new investment policy that considers selected sustainable investment aspects. Moving forward, monitoring and integrating these factors will be crucial for achieving better returns with more predictable risk. At Triglav Skladi, we don't view incorporating environmental, social, and governance (ESG) principles into our operations as being at odds with profitable business. On the contrary, we believe that adhering to ESG principles is essential for companies to achieve long-term success and profitability.
To ensure our team can make sound investment decisions that account for all relevant factors, including sustainable ones, we need to be well-informed, knowledgeable, and broadly educated. Crucially, our decades of experience, having weathered many downturns, also play a decisive role. Little can surprise us, as we consistently maintain our expertise in macroeconomics, financial analysis, regulatory requirements, and, increasingly, the sustainable risks of individual investments. All of this combines to form the understanding of circumstances essential for successfully growing wealth. When it comes to this, Slovenians are unique. On one hand, we're very conservative and reluctant to invest in proven low-to-medium risk investments. We hold a hefty EUR 25 billion in bank deposits that could be generating significant returns. On the other hand, due to a lack of information, we're prone to rash investments in pyramid schemes and very risky assets like cryptocurrencies.
Importance of education and training
Beyond books and podcasts on finance, I also enjoy reading and listening to content on psychology. Understanding crowd psychology is incredibly useful in my work. Hysterical exaggerations, excessive pessimism and fatalistic despondency can quickly lead to panic. In the most stressful moments, when the current situation isn't good, it becomes clear which clients are experienced and which are not. The number of experienced investors in our country who aren't scared by downturns is still small, but their ranks are growing every year. People are only rational in ideal conditions. That's why Warren Buffett's saying, "Be greedy when others are fearful," holds true. When everyone is afraid, that's the time for thoughtful optimism. In addition to all our other duties, we are therefore also responsible for educating our current and potential clients, so they can manage their finances more effectively and thus more easily achieve their goals.
Radivoj Pregelj is Senior Portfolio Manager at Triglav Skladi.
