Founder & CIO @ SCM Direct
“Don’t give up and always stick to your principles.”
Alan Miller is an accomplished fund manager whose 25 years track record puts him amongst a handful of highly respected UK fund managers. He started one of Britain’s first hedge funds in 1997 and had a starring role at Gartmore, Jupiter and New Star. But his contrarian mind-set and principled approach to managing money led him to believe that after the financial crisis of 2008 there needed to be a radically different approach to looking after clients’ money. This led him to launch SCM Direct.
JE: Please tell us about yourself and your experience. How did you become the Founder & CIO at SCM Direct?
Alan: I started SCM Direct as a result of not finding any professional managers offering management of my own family money in a diversified, low cost, transparent and sensible way. I felt that private clients tend to have the greatest loyalty but yet pay the highest fees and receive the worst service and worst fund managers. I was determined to change this using ETFs to accomplish it.
JE: What was your first job in the ETF industry? How did you decide to pursue the career you have today and what was the pivotal moment?
Alan: CIO at SCM Direct. I studied the Efficient Markets Hypothesis at University and believed that there were few inefficiencies in the markets save the pricing of smaller companies. I also believed that as information was distributed more evenly and freely that the informational advantage of active managers was disappearing and that index fund management made more and more sense.
JE: Was there a time throughout your career when you were unsure about where you were going? How did you combat the uncertainties?
Alan: No. I have always been lucky enough to manage money in the way that I believed was best in accordance with the circumstances prevailing at the time and in the areas where the greatest pricing anomalies existed.
JE: What would you say is SCM Direct’s overall strategy in terms of ETFs?
Alan: The strategy is to be well spread across the main asset categories, well spread within the individual assets, keep costs down and makes small evolutionary changes to asset allocation but in a contrarian manner, against the herd.
JE: How do you foster creative and innovative thinking within your organization? How are ideas shared and implemented within your organization?
Alan: The only way to encourage creativity and innovation is to encourage an investment team to stand up to their convictions, challenge consensus, and challenge themselves. Ideas are constantly discussed. Better to consider and reject new ideas than not to have any new ideas at all.
JE: What has been the highlight of your career to date?
Alan: I think maybe starting the first UK equities hedge fund in 1997 and managing it for 9.5 years with a compound return after fees of over 17% pa.
JE: If you can give advice to those who are just starting in the industry, what will it be?
Alan: Don’t give up and always stick to your principles.
JE: What would you say are the most significant changes in the ETF space in the past few years?
Alan: The evolution of smart beta ETFs and the continuing price wars in plain vanilla ETFs.
JE: Is there anything that you believe everyone in this industry should be working towards?
Alan: They should focus on educating the end consumer of the merits of ETFs – lower fees, greater transparency, better liquidity and normally better performance.
JE: What do you think is the “next big thing” – or what should we all keep an eye out for?
Alan: There is still a relative shortage in the range of fixed income ETFs and prices of the core plain vanilla fixed income ETFs need to come down by nearly half.