An Interview With CEO Of AgaNola, Oliver Gasser

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Below is our recent interview with Oliver Gasser, CEO at AgaNola:

Q: Mr. Gasser, what has been your record of success since you took over the position of CEO one and a half years ago?

A: First of all, we are satisfied with the continued positive development of our company and dynamic growth in our home market Switzerland as well as abroad. In Asia, for example, where there is also a growing demand for convertible bonds, our business is expanding continuously. According to Citywire and Morningstar, our fund managers rank among the best in the world and enjoy international recognition. But above all – and this is the most important performance indicator for us – we get very positive feedback from our customers on our work.

Q: How did Assets under Management as one of the key metrics perform last year? What are your goals for 2019?

A: Over the past two and a half years, we have more than doubled client assets under management to currently CHF 1.5 billion. This impressive growth is ultimately attributable to more than ten years of systematic development work, our positioning as a specialised asset manager, a continuity in strategy and fund management, and the strategic cooperation with Credit Suisse. Credit Suisse provides us with an established access to qualified and institutional investors in key areas such as Asia. As a specialised Asset Manager we do have both the expertise and dedication to provide our clients with word class products and bespoke services. For 2019 and beyond, we see further major growth potential – above all abroad. In Germany, for example, we were able to gain important mandates with institutional clients, insurance companies and private banks.

Q: When taking office you wanted to make the world of fixed income investments and bonds more tangible and experiencable for customers. What innovations have you introduced?

A: At AgaNola, we also focus on incremental innovation, i.e. the steady and gradual improvement of our products and services. This requires continuously updated knowledge of what we generate, inter alia, through cooperation with academic institutions. The new findings will be incorporated into the further development of existing products and the development of innovations. Also in our ranks we have recognized bond and fixed income experts such as Dr. Wolfgang Marty, who is constantly researching in this investment universe.

We endeavor to present the most complex issues as simple and understandable as possible towards our clients and stakeholders, communicating directly and vividly in the form of newsletters and videos. With “Fixed Income Insights” we have created an innovative format including periodic customer events. In a video campaign entitled “Why Convertibles?” we discuss both the generic benefits of Convertible Bonds and their specific strengths compared to other asset classes such as stocks or bonds. The campaign is published on our website and also on social media channels. All these measures serve to make the exciting, constantly evolving universe of fixed income investments tangible for the investor. Finally, the launch of a high-income convertible bond innovation is planned in the fourth quarter of 2019.

Q: In the U.S. there was a veritable boom in convertible bonds starting in 2017, largely thanks to the technology companies that took advantage of this asset class. What is the situation elsewhere?

A: Convertible bonds have also profited in recent years from the stock market boom. The US market takes a clear lead, followed by Asia. In Europe and Switzerland, convertibles still have the status of niche or alternative investments. This is unfortunate and difficult to understand because convertibles have been the best investment compared to equities and bonds over the last 25 years. In terms of total performance as well as in terms of return / volatility ratio. Convertibles therefore offer better investment performance when adjusted for risk.

After these years of above-average growth on a global scale, consolidation now seems to be taking place. For example, activity in the new issues market was modest in June with a volume of just USD 6.7 billion. In the first six months of the year, new issue volume was $ 40 billion, the second-lowest volume in a first half since 2012. Despite the weak new issue pipeline and subdued expectations, secondary market valuations held up well in light of persistently strong investor demand. In order to rekindle the momentum of new issues, good economic forecasts and above all new impetus on the part of companies are needed.

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Q: AgaNola’s specialty is convertible bonds. Which customer segments are you targeting?

A: Thanks to their hybrid nature, convertible bonds are “inherently” interesting to any type of investor as they offer “the best of both worlds” – bonds and equities. A convertible bond is a corporate bond with an option that allows the holder to convert the bond into a certain number of shares of the issuing company at any time. Convertibles bring in equity-like returns, but with far less risk than direct ownership of conventional stocks. They deduct interest and reimburse the capital at maturity, thus protecting the investor downwards if the underlying stock develops unfavorably. Last but not least – the interest rate sensitivity of convertible bonds is significantly lower than that of conventional bonds, so interest rate developments are only of minor importance for convertible bond investments. While CBs are not widely used among private investors, they are becoming increasingly popular among qualified investors who are professionally involved with the multi-faceted investment universe and factors such as swap terms or the options component. Correspondingly, our clients primarily include pension funds, institutional investors and family offices or wealthy private clients.

Q: AgaNola cooperates with Credit Suisse in various areas (research, joint development and distribution of the funds “Credit Suisse (Lux) AgaNola Global Convertible Bond Fund” and “Credit Suisse (Lux) AgaNola Global Value Bond Fund”. What are the key benefits for customers?

A: Looking back on the collaboration forged at the end of 2016, we can speak of a success story for all concerned and a symbiotic relationship that unites AgaNola’s qualities as a specialized asset manager with Credit Suisse’s leading international position. Our clients benefit in many ways, for example through concentrated portfolio management expertise or in the form of lower costs and economies of scale. A key component of success is that the fund management teams act on their own with a clear focus on customer value based on a common investment philosophy. The financial publication “Institutional Money” wrote that this kind of cooperation could serve as a role model for other market players.

Q: How important is digitization for AgaNola?

A: Wherever it makes sense and benefits the customer, we leverage the benefits of digitization in all areas of value creation – from product development, portfolio management, and compliance to sales and customer relationship management and communications. This enables our portfolio managers to access a comprehensive set of facts, figures and analysis. However, for us indispensable and irreplaceable is the knowledge and investment experience of our specialists, which are currently taking effect in the complex universe of convertible bonds and bonds which cannot be compared to stocks or ETFs. Robo-Advisors or digital portfolio managers are therefore not a scenario for convertible bonds, “our” asset class, until the foreseeable future.

Q: The economic outlook is uncertain. How do you prepare for different scenarios?

A: We are very sensitive and alert towards possible global market scenarios. Looking at the current situation, a series of questions are pressing: how long can the divergence between record-high stocks and recession-signaling bonds last? How long can the effectiveness of a loose monetary policy continue? How stable or fragile is the world economy? Against a background of weaker macroeconomic fundamentals and falling bond yields, we continue to favor high quality convertible bonds in the current environment. We also see ourselves protected against any market setbacks, because the delta of Investment Grade convertible bonds is close to a 10-year low. In the lower for longer scenario, where low or negative interest rates become the norm, we use alternative fixed income strategies, i.e. convertible bonds or “unconstrained credit”. The goal is to achieve a higher return for our clients through differentiating strategies with low correlation. In the case of Asia for example high diversification benefits can be provided to investors through global Convertible Bonds with a low correlation especially to Asian Fixed Income and Equity markets.