In an interview with Citywire, lead portfolio manager for the Fiera Capital US Equity fund Nadim Rizk discusses his buy-and-hold strategy.
Rizk characterizes his fund’s approach as “tectonic—everything is very slow,” adding that he is rarely tempted to make changes. In fact, the fund made no moves in 2018 (even during the Q4 correction) or so far in 2019: “A one to two-month correction is not enough for us to react to market changes,” he says, explaining that the fund’s average hold period for a stock is 10 to 20 years.
“The only way to make money as an investor,” Rizk argues, “is by buying and holding high-quality businesses and letting them compound over the long run. We think it’s very difficult to consistently perform when you’re always chasing new ideas.” He acknowledges, however, that there is a huge amount of pressure to do otherwise coming from clients, industry consultants, and round-the-clock news flow. “The toughest thing in this business is to do nothing,” he says, adding, “Whenever I get the urge to do something, I go and sit in a dark room until the urges go away.”
Frequent earnings reporting exacerbates the problem, Rizk says. “We try to encourage our companies to release results on a less-frequent basis because we don’t want a myopic view of things,” he says, adding, “There’s a huge amount of short-term focus in the markets.”