12 questions to:

Joanna Ałasa, ACCA, CFA, Investment Advisor

Asia, thank you so much for agreeing to participate in the 12on12 project!

Looking at the impressive number of titles you hold, it’s impossible not to start the conversation with you on personal development. What have the various certifications you hold given you and who would you recommend them to?

Each of them was useful in my professional work and I managed to obtain both the Investment Advisor and CFA certificates while still at university. With license number 281, I was among the first ten women to hold this title on the Polish capital market over the nearly 20 years of its existence. This shows how masculinized this environment is.

Most importantly, however, these certifications gave me the knowledge to start working independently as an analyst at a brokerage house and also opened the door for me to work at a mutual fund, where I still work today.

You deal with investments on a daily basis. Do Poles prefer to invest on the stock exchange by themselves or do more people use the offer of investment funds? Is Warsaw Stock Exchange dominated by institutional or individual investors?

According to available statistics, Poles are afraid to invest in risky assets and they perceive investment funds as a product for the wealthy. If they do invest, they often choose products perceived as relatively safe, e.g. bond funds, which, along with a drop in interest rates on savings accounts, have gained in popularity. The last several months have seen a significant increase in the number of brokerage accounts opened, which means that some Poles are trying to make money on the stock market on their own account, looking for alternatives to investing their savings. In 2020 individual investors accounted for a quarter of trading on the Main Market of the Warsaw Stock Exchange, which is the best result since 2009. On Newconnect (an alternative trading system with fewer formal requirements) the share of individual investors in turnover was as high as 92%.

You work at a mutual fund as an equity analyst. What does working on buy-side mean? What is the role of the equity analyst versus the role of fund manager?

A buy-side job is a job with an asset (capital) management company, such as an investment or pension fund. These companies invest the capital raised from clients on the stock market in order to multiply it. An analyst’s job is to evaluate a company’s financial condition, assess its competitiveness and attractiveness and as a result recommend the purchase or sale of shares in the analyzed company. Typically, analysts are responsible for particular sectors and within those sectors they make selections of companies for portfolios. The fund manager is the person who decides on the final shape of the portfolio, i.e. what securities (company shares, treasury or corporate bonds) or other financial instruments will be included in the portfolio. It is probably worth mentioning that in some companies the division into analysts and managers may not be applied, and the analyst’s work is performed by the manager.

If you can, describe for us how investment decisions are made by institutional investors? How are portfolio companies selected? Is there a lengthy process or rather quick decisions?

Every decision made by fund managers must be documented. One element of this recommendation is security valuation and analysis of financial and non-financial data (so-called ESG analysis) performed by analysts working for a given asset management company. These valuations have certain assumptions sewn into them regarding price, volume or cost developments in a given company. The purpose of these analyses is to identify stocks with the greatest potential for building value. Alternatively, to select those that should be removed from the portfolio.

If as a result of receiving new information, for example obtained through the analysis of published financial reports of a competitor, expectations concerning future results and financial flows change, the decision to buy or sell shares may be taken quickly. It is important to draw conclusions from observations of what is happening in the macroeconomic environment, not only in Poland but also globally. This allows us to identify investment opportunities before other market participants do.

Exactly, you have just mentioned incorporating ESG elements into capital market decision making. What does this acronym stand for and how can you incorporate these elements into your investment decisions?

Incorporating ESG (E- environment, S- social, G – governance) elements into decision making actually means increasing the amount of information we obtain and analyze about a company. In addition to analyzing financial data, we analyze non-financial data, i.e. environmental, social, and corporate governance data, i.e. the way in which companies are managed and supervised. This information includes, for example, whether the company aims to reduce its CO2 emissions or water consumption, whether it cooperates with local communities, how it cares for its employees, and what its policy is on ethics and anti-corruption. We then use the data obtained from these areas to create an internal ESG rating, which, depending on the type of fund and how strongly it integrates ESG elements into its investment process, has a greater or lesser impact on investment decisions.

Would you say that any of the ESG letters is more important for institutional investors? Or it depends on the sector in which the company operates?

For many years, the ESG element that everyone paid attention to was corporate governance. Its relevance has certainly not diminished, as without adherence to its principles any action in any other area will be worth little. Today, investors are paying more and more attention to environmental and social issues. This comes with increasing pressure from regulators and NGOs to allocate funds in sectors and companies that are perceived to support the sustainable development of economies and the planet. Of course, which element, environmental, social and corporate governance, is more important for a given company is linked to the sector in which it operates. For example, corporate governance in a bank plays a larger role than environmental issues.

What do you think is the future for ESG-based investing in Poland?

I think, as in Western Europe, ESG-based investing will become increasingly important. Today in Europe overall, about 50% of assets include ESG analysis in their investment process. According to MSCI’s „Investment Insights 2021” report 73% of investors who participated in the survey plan to increase their ESG-inclusive investments. This shows that ESG-based investing is no longer a side-trend in the world, but is becoming a mainstream trend. This is driven by increasing regulation and standardization of reporting rules, climate change, and the rise of climate risk and biodiversity measurement. Thus, there is no turning back from sustainable investments and capital market participants face numerous new challenges. Poland is moving in the same direction.

One of the criteria used in ESG is diversity e.g. board gender diversity. In my view, institutional investors have an important role to play in this issue – they vote at general meetings and decide on board composition. Supervisory boards elect management boards. What voting policies are in place at your company?

Absolutely. Diversity at the level of management and supervisory boards as well as the policies in force in this area are one of the issues to be evaluated e.g. when assigning ESG ratings by external companies. It is also an element we take into account at NN Investment Partners. At the beginning of this year, we reviewed our voting policy and element of diversity of the management board and the supervisory board was included in one of the clauses. We now vote at general meetings against the reappointment of male individuals if the percentage of women on these bodies is less than 20% in developed markets and less than 10% in emerging markets.

For the company you work for, NN IP TFI, ESG issues are important. You have become involved in 30% Club Poland Investor Group. What is this project and why did it attract your attention?

With common goals in mind, our company joined the 30% Club initiative and became one of the three founders of the investor group in Poland. The results of research conducted in recent years clearly indicate that diverse boards are significantly more likely to deliver above-average returns to shareholders than investments in companies that are not diverse. Asset management firms have a responsibility to create value for their clients and this is one way to do that.

You mentioned that diversity of opinion is important in management and boards. Is it the same when institutional investors are making decisions?

Unfortunately, there is no research exploring this topic because investment teams globally are not diversified. Women continue to be a minority here, so it is hard to provide such clear evidence as the one from studies done on general companies and businesses. Nonetheless, I believe that as in any decision-making process, a diverse mindset is important, and heterogeneous teams are simply more effective.

How to create a diverse environment – women in capital markets are still a minority. How do you attract them to what I believe is a fascinating profession?

Our company supports diversity, but I am still the only woman on our team. The problem is that these women are almost non-existent in the capital market. I think it will be important in this case to attract young women to work in asset management companies. It is much easier to find a suitable and qualified woman to join the team if we are not looking for someone with years of experience. The talent pool that we can draw from is just different.

Another part of your work is project management. I have the opportunity to work with you on 30% Club Poland and am impressed by your workshop. What is the key to effective project management? What tools do you use the most?

The key in my work as a project manager is communication. Amount and variety of information and its form make poorly planned communication a reason for project failure. I understand communication here as a tool used for several purposes, such as effective transfer of information, getting feedback on the progress of work, emotions in the team or reinforcing desired behaviour, i.e. as a motivational function.

What is certainly important is to be able to adapt your style of managing teamwork in a world where work can largely be done from home. Actually, in my case, I feel that the move to an online world has streamlined the execution of some projects, especially those that bring multiple organizations together. The tools available, largely purchased at the beginning of the pandemic to support shared work and hybrid communication have proven to be very effective and efficient.

Asia, thank you so much for this inspiring dose of knowledge!

Advisory services

We help companies build value for stakeholders by supporting them in decision making and communication of those decisions.

Support in taking decisions that build value for stakeholders.
Organic versus acquisitive growth. Equity versus debt financing.
Corporate strategy and valuation.

Support in relations with shareholders.
Perception studies, Investors’ Days, quarterly presentations.
Dividend and buy-back policies. Creation and valuation of stock option programmes.

Building of financial models and valuation of companies.
Streamlining of the reporting process, creation of controlling and managerial accounting sheets.