"Go back to the soul of the business": Q&A with Escala's Giselle Roux February 2017


One of the leading female investors in Australian finance, Giselle Roux, CIO of Escala Partners, takes the time to be part of our influential women series, passing on her industry knowledge and insights. She arrived in Australia from South Africa in the late 80s, out of her comfort zone but optimistic about the promise and possibilities ahead. Almost three decades later, she tells us about her most memorable investment to date, shares her thoughts on the Brexit "speed wobble" and offers some solid advice for women in the industry.

What excites you the most about your career?

Every day is different. Financial markets evolve - there are new issues, influences and product offers all the time. Rightly or wrongly, a lot of interesting people work in the industry and they are a constant source of knowledge and opinions. One would like to think one can make a difference to the financial wellbeing of an individual or the outcome sought by an organisation; in the end this is the measure of success.

As one of the leading female Investment Strategists in Australia, what advice would you offer to other women in the industry who may wish to emulate your success?

It puzzles me that women do not have greater representation in the financial services sector, particularly at a senior level. It has the capacity to interest anyone with technical and statistically minded capabilities. Economics is a great mix of history, data and what people do when confronted with unknown potential outcomes. In simple terms, one condenses the role to forming an opinion, testing its logic and internal consistency and being able to communicate it to others. Question everything.

Can you tell us what sparked your relocation from South Africa to Australia in the late 80s?

It was a long time ago! One should not be fearful of change or the uncertain. I’m not, by nature, a huge risk taker, yet it’s important to make decisions and then take whatever it offers on board. Leaving a troubled country for the unknown, yet promising, possibilities that we have in Australia, was a relatively easy choice. It did mean starting from scratch without the comfort of familiarity and that meant moving out of my comfort zone.

What do you think was the biggest lesson that you took away from your time as the CIO of JBWere and did that have an effect on the way you approached your role at Escala?

There is one requirement; the client’s interest must come first. Organisations can become engrossed in their own issues and it’s easy for the energy to get pulled in that direction. A collegiate working group, that is also willing to challenge one’s view without rancour, is a great working environment.

Who has had the greatest influence on your career thus far?

It may sound twee, but the clients probably have. That reaches back to equity analysis, where the challenge of conveying useful insight to a portfolio manager requires a balance of confidence in one’s own views, listening to their concerns and questions and taking on board their rebuttal or disagreements. The same applies to individuals and organisations now, it's their issues we are trying to solve, not our own.

The other is the often unappreciated individual working hard to make things happen for others. If you ever lose sight of the real end goal of your job, go back to the soul of the business. That will remind you that you are not the most important person. Often people refer to an individual who had a great influence on their career, and it's usually someone up a step or six in the corporate ladder. I find it hard to believe that just one person can be so important across working life.

In a previous interview you mentioned that investors shouldn’t be focussing solely on numbers when diversifying their portfolios, but rather looking at the bigger picture. What is your advice for effectively diversifying portfolios?

Data is essential but not the story. Almost always people look only at return, and usually at recent experience. Then they want to invest in this trend or momentum and invariably get in at the maturing end of a cycle, don’t appreciate the valuation aspect and when to get out. The key with returns is to understand when and why it was achieved. Circumstances change and the time frame matters. So many investors don’t focus on accumulation returns and only on price returns, for example.

Australia is a great place to invest, but is a relatively small and narrow economy dependent on commodities. There are many other investment options that are as good and at times, better. All options should be part of the menu. Saying that one does not understand or know the company or sector, is not the right reason to preclude any investment. What one should understand is why it may be appropriate and what role it will play in the portfolio. Most investors overestimate their understanding of local companies. They may know what they do at a headline level, but rarely much about the corporate strategy or why the share price goes up or down. They tend to be very forgiving of large downward movement in the traditional companies, yet get anxious with smaller moves in global investments.

What has been your most memorable investment to date (for either negative or positive reasons)?

In the midst of the 2008/9 financial crisis, the investment team recommended the Pimco global credit strategy. It was not only a good call given the uncertainty of the time, but required us to get investors into an asset class, and a global one, that they had little appreciation of. It taught many of us the approach and role of fixed income that is misunderstood today.

You described Brexit as a “speed-wobble” rather than a systemic economic meltdown in a recent interview. Can you expand on this and do you believe that the potential impact of Brexit has been misunderstood by the wider community?

Far from me to say we knew it was not going to be disruptive, at least in the short term. Yet there are issues that appear to be localised and therefore unlikely to result in the counterparty effects we saw in 2008. Other examples are the Greece debt crisis and even further back, the rampant valuation of US internet companies in 2000. Brexit, by nature, is going to take a long time and there may be counterparty effects in financial markets. The significance is in the rise of the nationalism we are observing at this time.  

How do you maintain a work/life balance and in your opinion, what’s the best way to unwind?

Everyone that knows me knows the answer to this question. I run and listen to podcasts at the same time. I totally tune out, so much so that I have run past my own children without noticing. I don’t mind reading financial reports and papers on weekends, I enjoy it and would do it regardless of my role.

What’s something that most people wouldn’t know about you?

Begs the question as to why I would disclose that! I grow vegetables, I like cooking, I don’t read financial books and I don’t watch television; not because it’s no good, just that there always seem to be better things to do. Also, I can’t remember people's names, now what were you called again?

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