SMALL CAP IDEAS: Amati Global Investors

As a former professional musician, one who played the violin for the Birmingham Symphony Orchestra, Dr Paul Jourdan’s move into fund management looks, to the outsider at least, like the career equivalent of a handbrake turn.

But for the founder and chief executive of Edinburgh-based Amati Global Investors, it was more a gentle pivot that saw him turn a pastime into a profession almost two and a half decades ago.

And, as Jourdan points out during our chat, his former job, its disciplines and principles, provided excellent preparation for the world of stock-picking.

‘Music’s a very mathematical language, which requires analysis and deep thought,’ he says, assessing the transferrable skills that can be used in fund management.

‘You can’t fake it either; when you play, if you haven’t done the work there is nowhere to hide. You learn about judgement; you learn about dealing with different views and integrating them into your own thinking.

‘And, most importantly, like fund management, it’s quite a humbling experience to be a musician because you’ll never reach your ideal.

‘That pushes you on to strive; to be better. And that’s fantastic.’

The unconventional career path began when Jourdan completed his music PhD at Cambridge and found himself at a crossroads.

‘What I’d initially intended to do was to go into teaching in a university music department,’ he explains.

‘And suddenly that got lost in realising, actually, there’s this other thing I could do; a whole different world that I never expected to be able to discover.

‘And it was just such an exciting prospect that I thought I’ve got to give this a go and I’ve got to try it now.’

This ‘other thing’, the ‘whole different world’ he refers to, was his keen interest in investing which he parlayed into the world of work.

His first job was with a company called Stewart Ivory, which he joined in 1998.

When it was taken over by First State in 2000 Jourdan became manager of what is now TB Amati UK Smaller Companies Fund, and, five years later, he launched what is now the Amati AIM Venture Capital Trust (VCT).

Eventually, he was invited to manage the funds independently, which prompted the formation 12 years ago of Amati Global Investors.

The name of the business is a nod to Jourdan’s musical roots.

Specifically, it’s a reference to the foundational family of violin makers dating back to the 16th century Andrea Amati in Cremona, whose grandson Nicolò Amati, was a teacher of Antonio Stradivari.

His first job with Stewart Ivory helped provide some of the guiding principles at play at Amati today.

‘There’s no shame in copying when you see something that is good,’ says Jourdan.

So, Amati’s overarching aim, according to the company’s website, is to create ‘savings vehicles’, suitable for a wide range of UK investors, with diverse portfolios of carefully analysed businesses.

Actively managed, the idea is they are capable of performing in a variety of market conditions.

Crucially, the environment at Amati eschews the silos found at other larger houses and allows investment teams to work together focusing on coming up with the best investment ideas.

That’s the theory, but what does it mean in practice?

‘The culture of the firm, I think, is one where we’re very collaborative,’ Jourdan says.

‘We share a lot between the teams and part of the idea of building out the funds base was to strengthen the intellectual property in the business – and that’s really around idea sharing.’

Today, as well as the smaller companies and VCT funds, he and his team manage Amati’s AIM IHT Portfolio Service, the TB Amati Strategic Metals Fund and the TB Amati Strategic Innovation Fund.

Smaller companies, VCT and AIM IHT have been top long-term performers, beating by some way their individual benchmarks.

For example, the long-established smaller companies fund is up 252 per cent in the last 10 years, compared with an average return of 171 per cent, which puts it very firmly in the top quartile in its peer group.

And the picture is similar for the venture capital trust and AIM IHT fund.

The metals and innovations funds are yet to fully demonstrate their potential; in the case of the former, it is at the very formative stage of its evolution. But both are backed by impressive specialist teams.

So, Georges Lequime and Mark Smith, the leads on strategic metals who joined Amati almost two years ago, have a huge hinterland of knowledge about the mining sector that will, Jourdan says, stand the fund in good stead.

The strategic innovation fund, meanwhile, can call on the expertise of Mikhail Zverev, who ran global equities teams at Standard Life Investments and joined in February, working alongside Graeme Bencke and Dr Gareth Blades.

‘What we’ve done in the last two years is to bring in new investment teams; some fantastic specialists,’ says Jourdan.

‘Those specialists have also brought with them an international perspective to investing in smaller, innovative companies that Jourdan had in mind when he founded the business 12 years ago.

‘When we named the business Amati Global Investors back then, we recognised that UK Small Cap covers companies with operations across the globe.

‘Now we have taken that a step further and launched funds that invest in different stock markets around the world too.’