Episode 149: “Emerging Markets” Is Misbranded. Sloane Robinson, CIO, Edward Lam on Scaling from £1M to £3.5B and Rethinking EM Risk.
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What if the biggest problem with “Emerging Markets” is the name?
Edward Lam thinks that label has been doing the category a disservice for decades.
Today, he’s sitting down with Stacy to zoom out and question the category…then zoom back in to what that means for portfolios, risk, and real alpha.
Edward grew up in Hong Kong, went to boarding school in the UK, and landed in EM in 2004.
He had no training program or mentor, just four walls of books he was determined to read. By the time he left, he’d taught himself accounting, built a research function from scratch, and was running a fund that grew from £1M to £3.5B.
Listen in to hear:
How Edward built his own training program from scratch and why that became one of his biggest edges
What "subordinate currency regimes" means and how it changes everything we thought we knew about EM risk
The tension between building something investable and staying true to the thesis
What scaling from £1M to £3.5B actually looks like when you have to earn every rung yourself
Why he walked away from asset management, what the gap taught him, and what brought him back
More About Edward Lam:
Edward Lam entered the fund management industry in 2004 as an analyst at Emerging Markets specialist Lloyd George Management, covering Taiwan and technology. In 2007, he co-founded Somerset Capital Management, where he served as Head of Research and chaired the investment committee. In 2010, he launched Somerset’s EM Dividend Growth strategy, scaling it from a ~$1.5M seed to nearly $4B AUM. Edward left Somerset in 2020, then joined Sloane Robinson in 2023, became CIO, and launched the SR Ocellus fund in 2024.
In his free time, he enjoys reading about the history and philosophy of finance, including many areas that others (based on feedback) find boring.
TRANSCRIPT
Below is an AI-generated transcript and therefore it may contain errors.
[00:00:00] Stacy Havener: We've never undertaken the rebrand of an asset class on Billion Dollar Backstory, but hey, today we give it a whirl. Today's guest has spent his career asking the questions no one else in the room was asking, and building the intellectual frameworks to answer them. Edward Lam grew up in Hong Kong, went to boarding school in London, and stumbled into an emerging markets boutique in 2004.
[00:00:25] He had no training program, but he did have four walls full of books he was determined to read. By the time he left, he'd created his own version of investment analysis, built a research function from scratch, and was running a fund that grew from £1 million to £3.5 billion. But here's the thing about Edward.
[00:00:47] He's never really believed in emerging markets. He has his own framework, sharper, historically consistent, and yes, slightly too intellectual for a [00:01:00] tagline. He calls it subordinate currency regimes, and it challenges everything about how you think about the emerging markets opportunity. After years at Somerset and a hard-earned break from the industry, Edward is now at Sloane Robinson, where he relaunched a long-short fund built on original research, unconstrained thinking, and the conviction that real alpha comes from one place, the sharp edges in a difference of opinion.
[00:01:36] This is a special conversation with a rare bird. Please meet my friend, Edward. Hey, my name is Stacy Havener. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the toughest boys club, Wall Street. I've raised over $8 billion that has led to $30 [00:02:00] billion in follow-on assets for investment boutiques.
[00:02:03] You could say against the odds. Yeah, understatement. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here. Money, authenticity, growth, setbacks, sales, and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in college, mixed with happy hour.
[00:02:30] Pull up a seat, grab your notebook, and get ready to be inspired and challenged while you learn. This is the Billion Dollar Backstory podcast.
[00:02:45] So this is really fun for me. You know what? This is fun for me on a lot of levels, and I'm gonna tell you why. First of all, I am hanging out with one of my LinkedIn friends. It's not real life, I guess, because it's still on Z- whatever this is on the computer, but [00:03:00] it's the closest thing to real life that we've had.
[00:03:02] So I am super thrilled to have Edward Lam with me today. The other reason I'm really jazzed about this is because I love emerging markets. Like if I had a T-shirt, it would say, "I love EM" on it. Then I would have another one that would say, "I love high yield," and, "I love small cap," and that's why the beta of my equity portfolio would be like 2X.
[00:03:26] Edward Lam: You, you're, you're baiting me, aren't you? You're baiting me because, because, 'cause you know that I have, I have reservations about emerging markets and small cap- ... and, and, and everything. See, but I mean it. And they need a rebrand. Yeah, yeah. And, and actually, the, the funny thing about what you've just done is that obviously I've, I've run a team in emerging markets before, and we used to get huge numbers of applicants, and they'd all come and say, "Oh," you know, and I'd ask them obviously why they want to be-
[00:03:58] Stacy Havener: Yeah
[00:03:59] Edward Lam: [00:04:00] joining this firm and, and helping me with my fund. And they'd say, "Well, I'm really excited about emerging markets and the growth that there is there and all this sort of other stuff." And I'd say... Well, I, I didn't say much, but I just, I just thought, "Okay, this is, this is not where I wanna start," because I just think it's all overrated.
[00:04:17] Stacy Havener: I know. I know you do. But I really do... Now, here... Okay, so we're gonna talk about this. We have to do your backstory first, but here's the th- actually, we can do whatever we want 'cause it's our world. So the d- the disconnect is you are a specialist in emerging markets, aren't you?
[00:04:34] Edward Lam: Yes. Yeah, that's where I started.
[00:04:35] Yeah. So I started, uh, 2004 I joined a company called Lord George Management- Yeah ... which was an emerging market boutique specialist in emerging market equities, and I was an analyst there. Uh, I covered Taiwan and Asia principally, Taiwan and tech. And yeah, that's, that's kind of where I started.
[00:04:55] Stacy Havener: Did you have the I Heart Emerging Markets T-shirt on at that point?
[00:04:59] Edward Lam: No. [00:05:00] You've- No ...
[00:05:01] Stacy Havener: never had it on. Didn't even purchase
[00:05:04] Edward Lam: it. No, because, because, well, to be honest-
[00:05:08] Stacy Havener: Yeah ...
[00:05:09] Edward Lam: uh, one of the... Well, there's, there's two parts of this perspective. One is that, uh, so I'll, I'll just frame this. Firstly, I was, I was incredibly lucky-
[00:05:18] Stacy Havener: Mm ...
[00:05:19] Edward Lam: to be offered this job, so-
[00:05:20] Stacy Havener: Okay ...
[00:05:21] Edward Lam: incredibly grateful and, and I managed to get it, and that was super.
[00:05:26] On the other hand, just me taking a step back from-
[00:05:29] Stacy Havener: Yeah ...
[00:05:29] Edward Lam: it all as an equity analyst, to me, there was a certain extent to which, like, for me, emerging markets was a sort of secondary backwater and- Uh, and the more important thing to me was, you know, can you test your skills as an equity analyst?
[00:05:46] Stacy Havener: Mm.
[00:05:46] Edward Lam: Okay.
[00:05:47] And where do you wanna test them?
[00:05:48] Stacy Havener: Yeah.
[00:05:48] Edward Lam: Um, and as I'm not s- actually, emerging markets presents a unique and, and great challenge, and actually has allowed me to learn many things that I might not have learnt if I was just covering [00:06:00] US equities. Ooh.
[00:06:00] Stacy Havener: Okay.
[00:06:01] Edward Lam: But having said that, it doesn't... You know, I was sort of basically just very agnostic to where I was doing the stock picking, right?
[00:06:11] And then the other, the other thing I'd add is that even at that time, I-- the whole idea of emerging markets was already slightly a bit weird to me. Uh, I mean, pa- partly because I, I, I, I was born in Thailand and I grew up in Hong Kong, and joining a London-based emerging market firm that, I'll be honest, kind of had a slightly almost neo-colonialist kind of perspective on the world- Ooh
[00:06:40] in the sense that, you know, we've got capital and then we are gonna invest it in, in these unknown places in Asia that I happened to grow up in. You're
[00:06:47] Stacy Havener: like, "I know them 'cause I lived there."
[00:06:49] Edward Lam: Well-
[00:06:49] Stacy Havener: So yeah ...
[00:06:49] Edward Lam: and, and, and, and billions of other people live there too.
[00:06:52] Stacy Havener: Exactly.
[00:06:52] Edward Lam: Right?
[00:06:52] Stacy Havener: Yeah.
[00:06:53] Edward Lam: So th- these, these are not unknown places.
[00:06:55] Stacy Havener: Yeah.
[00:06:55] Edward Lam: Um, and so I've always done it from a slightly different perspective. [00:07:00] Yeah. Certainly from the perspective that I found in London circa 2004, 5. Um, yeah. So that-
[00:07:09] Stacy Havener: So, so this is great because it's, it's like tying in the backstory, and I like when things just happen naturally, so we're just gonna keep going with it.
[00:07:15] So you grew up there, but then you went to university and such- I was sent to boarding school ... and yeah. Okay. Yeah. Okay. Gotcha. And- So and then once you came to London, were you like, "This is where I'm gonna make my home," or did it-- did you ever feel like you want- wanted to go back?
[00:07:30] Edward Lam: Uh, I think that I've just always, I've always enjoyed being in London, in the UK.
[00:07:35] Yeah.
[00:07:36] Stacy Havener: It's a
[00:07:36] Edward Lam: great city. Uh, and then I'll be... You know, again, I'll be honest, I was sent to boarding school here, and that was probably the kind of, for me, the, the formative experience of, you know... And, and I feel most comfortable here rather than actually in Asia or in, um... Yeah.
[00:07:53] Stacy Havener: Okay. So it's, it's super interesting.
[00:07:56] I love your candor, by the way, 'cause that's what makes for, like, a [00:08:00] really great conversation. And also, by the way, that's what makes sharp edges real, right? If you don't have a point of view- Mm ... then there's no edge to what you're saying. It's very difficult- Totally agree. Yeah. Right? It's very difficult for anybody to disagree with you, but it's also very difficult for anybody to, like, be passionate about what you're doing 'cause there's nothing- Yeah
[00:08:20] to grab onto.
[00:08:21] Edward Lam: Well, on top of which, also, to me, it's helped start to develop investment edge.
[00:08:29] Stacy Havener: Yeah.
[00:08:29] Edward Lam: Just because you're already st- you're automatically starting from a different perspective. I mean, a- again, one of, one of, one of the, the funny things that I have mentioned, you know, is sort of- bit of an anecdote is, is this, again, the, the perspective, uh, back in 2004 about emerging markets being developing and, and having to catch up to the- Mm
[00:08:50] to the developed world, right? But I just remember when I first came here to the UK, none of their cars had electric windows, and I, [00:09:00] I, you know, whereas they all did in, in Hong Kong, and I was sort of like, you know, who, who-- Again, it's just a very different perspective and, you know, who cares who's more developed in a sense?
[00:09:09] Like, uh, yeah.
[00:09:11] Stacy Havener: But that's so great. You know, I love it. So it's not that you didn't-- It's not that... Okay, so let me see if this is right. It's not that you didn't believe in that, in those parts of the world as investments, it's that you took- No ... you know, you had issue with how it was the narrative around it and how it was being- The branding
[00:09:31] captured. Yeah. Yeah, yeah, yeah. Yeah. I'm tracking with you. And so in your mind, w- it's a branding. What would you have called it?
[00:09:38] Edward Lam: Well-
[00:09:38] Stacy Havener: You're in charge of the, of the narrative of emerging markets, the rebranding.
[00:09:42] Edward Lam: So this is, this is something that I've worked on for many years now, and, and it's... I, I think it's not a particularly-- It's a v- it's quite an intellectual framework.
[00:09:52] Stacy Havener: Yeah.
[00:09:53] Edward Lam: So I, I call emerging markets subordinate currency regimes. Um, and there's a whole history behind this.
[00:09:58] Stacy Havener: Tell me.
[00:09:58] Edward Lam: Um, because [00:10:00] if you go back to the origins of emerging markets as a concept, it was Antoine van Agtmael in, I think it's the early '80s, late '70s, he coined the term, and he was rebranding emerging markets from the Third World or- Uh, yeah
[00:10:15] underdeveloped countries, right?
[00:10:17] Stacy Havener: Mm-hmm.
[00:10:18] Edward Lam: And I think there, there are a lot of important points about that. Firstly, he was actually a credit investor, not an equity investor, so many of the concepts that he started with then didn't really translate into equity investment. So as a bond and credit investor, they were actually incredibly attentive to capital cycles, capital flows, and currency risk, which is something that disappears from the narrative in the 2000s for equity investors.
[00:10:49] They s- start sort of assuming that you can invest in emerging markets as if they're the US. Um- Mm-hmm ... and it doesn't ma- You know, you're not, you're not so actively thinking about things like [00:11:00] currency risk. But the other thing that he was essentially talking about was how these countries were emerging, but what they were emerging, they were emerging into a relationship with the capitalist system, so it was globalization.
[00:11:16] Yeah. And so you had countries, and you also had the ex-Soviet bloc, right? So you had countries coming out of alignment with Soviet Russia and then coming into alignment with the US capitalist system, and essentially, in, in my terms, they became subordinate to the US dollar- regime.
[00:11:38] Stacy Havener: Mm-hmm.
[00:11:38] Edward Lam: Um, and so that's the sort of, that's the general framework.
[00:11:42] And the reason I, I-- for me it's sort of important is that it's a way of seeing emerging markets that's actually historically in- intellectually consistent and, and it's still relevant. It was relevant 40 years ago, and it's still relevant as a framework. Whereas when [00:12:00] you, when you try and define emerging markets in the s- in the ways that, let's say, the MSCI and, and the inde- indices define it, um, you start getting into, uh, contradictions and problems.
[00:12:14] Like, you know, historically we define them as higher growth countries- Mm-hmm ... or we define them as less developed, or we define them as, you know, technology importers and all these other things when those things no longer really apply. But something that still applies is that when there is a financial crisis, uh, you know, the Korean Central Bank goes to the Federal Reserve for a current- currency reserves, uh, currency swap, and, and that actually, you know, that's in '08.
[00:12:40] That almost defines it as a subordinate currency regime. So.
[00:12:45] Stacy Havener: I wish I had popcorn.
[00:12:47] Edward Lam: Sorry.
[00:12:47] Stacy Havener: That's what kind of a geek I am. I'm like, "Okay, I'm not gonna ask any questions. I'm gonna just let you riff." Because this is like- But, yeah ... it's so interesting to me. Keep going. I'm serious. Like, you could just-
[00:12:59] Edward Lam: No, no, I, [00:13:00] I, I think the issue with-
[00:13:01] Stacy Havener: Yeah
[00:13:01] with
[00:13:01] Edward Lam: as, as a, as a concept is it, is it's, um... As someone said to me, um, and it's quite a senior person at Morgan Stanley. He basically said that the problem with it is, is that it's too intellectual-
[00:13:13] Stacy Havener: Yeah ...
[00:13:13] Edward Lam: and, um, yeah.
[00:13:15] Stacy Havener: Which-- But that's why you're a fund manager and not a branding person.
[00:13:18] Edward Lam: Yeah.
[00:13:18] Stacy Havener: Right? Because- Exactly.
[00:13:19] Edward Lam: Someone
[00:13:19] Stacy Havener: else- Yeah, yeah. Exactly. Someone else can solve that, s- solve that problem. But what you're saying intellectually is very interesting. As a branding person, now I'm trying to like square the two things. You probably could if you, if we had enough time, we could probably show how what you're saying is emerging and kind of redefine the emerging word to mean something different than, than what it typically means, which is what I think- Yeah
[00:13:42] you're saying. So I have so many questions, not the least of which is, have you always... Okay, I, I'm pretty sure you always felt this way, 'cause that's very authentic and clear. But were you always able to articulate this? 'Cause if you get hired as an EM analyst, did [00:14:00] they want to hear this riff of why it's not developing and why it's not high growth?
[00:14:05] No. Or... Yeah, no, they didn't wanna hear that.
[00:14:06] Edward Lam: No.
[00:14:07] Stacy Havener: No.
[00:14:07] Edward Lam: Not, not at all.
[00:14:08] Stacy Havener: No. No,
[00:14:08] Edward Lam: they're interested. I mean- ... and that's, that's part of the problem. Yeah, ex- you know, I was sent off to Hong Kong to, to, to look at, you know, um, Asian stocks and, and, um, no.
[00:14:18] Stacy Havener: Right.
[00:14:18] Edward Lam: Uh.
[00:14:19] Stacy Havener: But you felt it.
[00:14:20] Edward Lam: Yes. And to be fair, this is the-- I suppose there was the visceral reaction, which was always immediate.
[00:14:27] Th- this intellectual journey- Yeah ... in a sense took a little, little bit longer. Okay.
[00:14:31] Stacy Havener: Gotcha.
[00:14:31] Edward Lam: Right. So that's something that, that definitely I was trying to work it out and, and- You know, through-- I, I guess for me this was... I actually wrote about it and it was kind of crystallized in about 2015. So it was probably- And where
[00:14:45] Stacy Havener: were you then?
[00:14:46] 'Cause I kinda was looking at your- Yeah ... journey. At that point you were at Somerset?
[00:14:51] Edward Lam: Somerset. Yeah. That's right. Yeah.
[00:14:52] Stacy Havener: Okay.
[00:14:53] Edward Lam: So the team at-- the global emerging market team at Lloyd George Management left, and then we-
[00:14:59] Stacy Havener: Ah, gotcha ...
[00:14:59] Edward Lam: set
[00:14:59] Stacy Havener: up [00:15:00]
[00:15:00] Edward Lam: Somerset. Okay. And I started as an analyst there, but I was quite quickly promoted to be head of research.
[00:15:07] And I think, yeah, I mean, f- for me the, the part of the, the backstory o- on that, and it ties into, you know, what I was originally saying about, you know, feeling lucky to have even gotten the job- Hmm ... that I got, is that, uh, I, I kind of threw myself into learning everything I could about asset management and how to value stocks and accounting and all this sort of other stuff.
[00:15:31] And in a funny way, because when I started at Lloyd George Management and continued at Somerset, one of the things that I was told was, uh, "There's, there's no pro- uh, training program," and, you know, I don't know, you know, "We're probably not gonna mentor your- mentor you either." So, so you just, you just kinda go off and, and, you know...
[00:15:50] Um, but in a funny way it was actually, for me anyway, very good for me because I, I threw myself into it and I, I genuinely [00:16:00] believe...'Cause, you know, the typical, typical office hours for the, for the team were 9:00 to maybe 6:00, and I just decided that I had to do more. So I would do 8:00 till 6:00 and then I would go home and I'd continue reading and learning about financial modeling and learning about accounting and all this sort of other stuff.
[00:16:18] Which is actually how I got to be head of research because by sort of two years in, I was already starting to teach the other analysts and the fund managers about accounting and how to actually do financial modeling and all that so- sort of other stuff. So they effec- effectively created this role for me to be head of research and, and kind of be in charge of the research process and also training people and, and, yeah.
[00:16:43] So that's certainly from, you know, from my point of view it was incredibly valuable. And also that in investment in general-
[00:16:51] Stacy Havener: Hmm ...
[00:16:52] Edward Lam: a- as in a lot of things, but I think particularly in, in investment, it really pays [00:17:00] when you, you learn it not from received wisdom, but you actually, um... Which actually, uh, just reflecting on it, 'cause I, 'cause I read a lot of your stuff and- Mm
[00:17:11] Stacy Havener: and
[00:17:11] Edward Lam: I can see that, um, sort of shines through in a lot of your content.
[00:17:16] Stacy Havener: I love that comment.
[00:17:18] Edward Lam: You, you- Yeah ... you sort of- It's, it's deep thinking
[00:17:21] Stacy Havener: Mm-hmm ...
[00:17:22] Edward Lam: uh, not in an AI kind of-
[00:17:23] Stacy Havener: Mm-mm ...
[00:17:24] Edward Lam: you know, fake way, but, but, um, and you've really worked it out from first principles or from bitter experience- Yes ... or from whatever else it is.
[00:17:32] Stacy Havener: Yes.
[00:17:33] Edward Lam: Yeah.
[00:17:33] Stacy Havener: Yeah. I, I very much appreciate that comment and empathize with it. You know, there is something about lived experience that is different than, you know, received- Yeah ... wisdom, and which is also why they say, like, you learn more from mistakes, if you will, than anything because you feel them differently [00:18:00] ultimately.
[00:18:00] Yeah. Right? Yeah. And that's the part that you can't replicate. If I've lived through something horrible and learned really valuable lessons from that, even if I tell you about them, you can't really feel it- Yeah ... the way that-
[00:18:12] Edward Lam: Absolutely.
[00:18:12] Stacy Havener: Yeah.
[00:18:13] Edward Lam: Yeah.
[00:18:13] Stacy Havener: So, so there is-- I love, I love the, the rever- like the anti-mentor, anti-training program, which wouldn't work for all people, by the way.
[00:18:24] Edward Lam: Like- No, it absolutely wouldn't, and I, I- Right ... and, and actually I wouldn't, I wouldn't recommend it.
[00:18:28] Stacy Havener: Yeah. Um-
[00:18:28] Edward Lam: Like
[00:18:29] Stacy Havener: that is, that is like
[00:18:30] Edward Lam: really- I mean, because, because that's the, that's the other thing that, uh, it was someone, uh, else, again, different Link- LinkedIn-
[00:18:37] Stacy Havener: Yeah ...
[00:18:37] Edward Lam: commentator who suggested, look, there's, there's two ways of learning and becoming an analyst.
[00:18:44] One is you do the CFA-
[00:18:46] Stacy Havener: Mm, yeah ...
[00:18:46] Edward Lam: or you read all these books. Um, and I mean, I basically did, did the books thing, but the books thing is, I would say not for the majority.
[00:18:57] Stacy Havener: Mm.
[00:18:58] Edward Lam: I think it's actually for a very small [00:19:00] percentage.
[00:19:00] Stacy Havener: Yes.
[00:19:00] Edward Lam: Because you have to be very self-driven and motivated, and you have to get through a lot.
[00:19:06] Whereas with the CFA or some other training program example, you just follow the pathway and it's- Mm ... you know, it's quite clear and, and you-- and actually it suits certain people because you know what the next thing you have to do is. Whereas when you're doing it the way I was doing it, you don't know-
[00:19:26] Stacy Havener: Yeah
[00:19:26] what
[00:19:26] Edward Lam: the next thing is. But in a sense, that's the beauty of it because you start learning, and this is where, from my point of view, you end up learning things that you would not have learnt, um, in many different ways. And, and one of the, you know, really small examples was, was just this is a few years ago when, when an analyst came to me and they were trying to model a bank, and they were confused about why they couldn't get, uh, their net interest margin in the model to match up with what the bank was reporting.
[00:19:56] Stacy Havener: Yeah.
[00:19:57] Edward Lam: And I just immediately explained, "Oh, well, actually, the thing [00:20:00] is that if you've ever done this, is there are a number of different ways to calculate that ratio, and no one ever tells you that."
[00:20:07] Stacy Havener: Mm.
[00:20:07] Edward Lam: Um, you know, so but you want, you want... you learn that if you do it yourself, as opposed to- Being taught that, for example, there's just this one way.
[00:20:17] Stacy Havener: Yeah.
[00:20:17] Edward Lam: Or just being told that this is what the margin is by a bank, um, and not actually working it out and work, you know. Um, yeah.
[00:20:25] Stacy Havener: It's so fascinating. It's like choose your own adventure, you know- Yeah ... uh, if you remember those books, right? Yeah, yeah, yeah. Like which page do you wanna turn to, right? And you, and you'd be like, "Well, okay, let me do this."
[00:20:34] And you go back and be like, "Okay, now let me try that way."
[00:20:37] Edward Lam: Yeah.
[00:20:37] Stacy Havener: And, and it- Exactly. Yeah. And it- And
[00:20:39] Edward Lam: that's the beauty of it.
[00:20:39] Stacy Havener: It is. And
[00:20:40] Edward Lam: that's actually what's fun in
[00:20:41] Stacy Havener: my opinion. That is fun if you're a curious and intellectual person. Yeah. And also, I was just writing about this somewhere, I don't know where, um, that, that whole thing of serendipity, like not, not in the casual normie sense- Mm
[00:20:56] but in the way of like when you were actually a scientist and doing [00:21:00] experiments and you would have like- Yes ... a legitimate serendipity where you yell eureka and here's this new thing. Yes. You can't get to that unless you do the type of, of learning that you're describing where you are just, what happens if I follow this?
[00:21:13] Edward Lam: Exa- exactly. Yeah. And, and that... I mean, that's what I love doing. That's what, to me, it's not all about, but it's, it's a h- it's a huge part of- Yeah ... what I think this is all about, particularly if you want to have edge in markets because it, it means that we, we, you know, we're constantly, and this is as a team-
[00:21:34] Stacy Havener: Mm
[00:21:34] Edward Lam: constantly generating original insights. Mm. Some of them we actually think are original and they're not because someone else is working on it too, but that's not the point. The point is that we have the possibility of creating original research and insights because that's, this is sort of endemic to our process, is thinking, um, and doing it this way.
[00:21:53] Stacy Havener: And is that, is that the type of alpha you want? Not even... 'Cause, you know, you could say like there's, [00:22:00] there's lots of ways to define alpha. Yes. And in fact, I printed something- Yeah ... that you, you wrote about when you said one of the truest things I ever read about in the fund management industry, which was- Right
[00:22:07] really, really a great thing. Um, but you know, you hear people say, "Oh, well, I- my alpha's from stock selection," and there's certainly lots of... That actually doesn't really tell you much other-- because the way you could calculate that, there's many reasons- Yeah ... how you got there. But I think would you say that's where you want your alpha to come from?
[00:22:25] I mean, we all take alpha wherever we get it- Yeah ... but that original idea piece.
[00:22:30] Edward Lam: So again, from, you know, from first principles to me, in terms of markets, alpha is, is zero sum.
[00:22:37] Stacy Havener: Mm-hmm.
[00:22:39] Edward Lam: And in order to generate it, you have to have a difference of opinion that's proved correct, or at least that's my opinion.
[00:22:46] Yeah,
[00:22:46] Stacy Havener: I agree with that.
[00:22:47] Edward Lam: Um, and it's not the only way, but certainly for me, in my, in my experience, one of the most powerful ways of, of actually generating that is from, you know, as we've s- [00:23:00] been talking about, doing your own work.
[00:23:01] Stacy Havener: Mm-hmm.
[00:23:02] Edward Lam: Constructing an argument that has credibility and value that is your own or that you've built, and then seeing if it works.
[00:23:10] And it's kind of like-- And, and also to me it's, it's kind of a bit like any other kind of craft where if you are, you know, if you're a carpenter or whatever and you're doing your own handmade things-
[00:23:23] Stacy Havener: Mm-hmm ...
[00:23:24] Edward Lam: that's something that can't be replicated by- Mm ... you know, the mass-manufactured product.
[00:23:30] Stacy Havener: Yeah.
[00:23:30] Edward Lam: Um, and that's where the value added actually is.
[00:23:34] Stacy Havener: Mm-hmm.
[00:23:34] Edward Lam: Um...
[00:23:35] Stacy Havener: Whoa, my mind's like... Okay, this is so good. So there was something else-- Okay, wait, I have a, a question on backstory because you just described at Somerset you were teaching the analysts. And were you also running a portfolio at the same time or you were not doing that?
[00:23:55] Edward Lam: Uh, I was head of research first- Mm-hmm
[00:23:58] and then-
[00:23:59] Stacy Havener: [00:24:00] Okay ... a
[00:24:00] Edward Lam: couple of years later I got a portfolio to manage. Okay, gotcha. And then I was doing that simultaneously.
[00:24:04] Stacy Havener: Yeah. Okay. And was that long only or was that long-short there?
[00:24:08] Edward Lam: That was long only.
[00:24:09] Stacy Havener: Okay. That was long
[00:24:09] Edward Lam: only.
[00:24:09] Stacy Havener: So this is-- I have lots of questions now about that.
[00:24:13] Edward Lam: Yeah.
[00:24:13] Stacy Havener: Um, so talk to me about that, 'cause now you're running long-short.
[00:24:17] Edward Lam: Yeah. Which is great.
[00:24:19] Stacy Havener: And also like not-
[00:24:21] Edward Lam: So,
[00:24:22] Stacy Havener: so- And not common, I would say, in
[00:24:25] Edward Lam: EM. And certainly not in EM, yeah. Yeah. Because they've all died. Um- It's, it's true.
[00:24:30] Stacy Havener: True.
[00:24:31] Edward Lam: It's a shame 'cause-- But that also is, is where I, I think there's a potential advantage now to... Yeah. Anyway, but the, the funny thing is, is that when we set up Somerset-
[00:24:42] Stacy Havener: Mm-hmm
[00:24:43] Edward Lam: the truth is I was, I was actually promised a long-short hedge fund to manage-
[00:24:49] Stacy Havener: Mm ...
[00:24:49] Edward Lam: um, way, way back when. And then the opportunity came along and they said, "We, we, we would like you to be a fund manager, but we were thinking [00:25:00] you might do a dividend product in emerging markets." And then so then, then, but then they said, "So what would you rather do?
[00:25:06] Would you rather do a dividend fund or would you do rather do a hedge fund?" And obviously I said to them, " I'd love to do a hedge fund." And then they thought about it and they came back to me and said, "What we've decided is that you can do a dividend fund." And to be honest, I was just, again- Right ... just delight, delighted to, to even have a fund, right?
[00:25:26] So-
[00:25:27] Stacy Havener: Right ...
[00:25:27] Edward Lam: so I took that on, obviously did it as well as I, I could. But truth is, I've always been interested in the short side as well as the long side. I've always been interested in more of the flexibility that running a hedge fund gives you. You know, using cash more, not having the constraints of necess-necessarily always being fully invested.
[00:25:48] Mm. Um, we are using some options and der- other derivatives now, which again, I think just... Well, just interesting to me. And, you know, dare I say it, it's, it's fun [00:26:00] being able- Mm-hmm ... to learn and then apply the learning, uh, and test it.
[00:26:05] Stacy Havener: And so interesting. And also even just as you were describing the conversation, which I'm sure wasn't literal, but like just the way that British people communicate, like it's just so polite and like we'll go back and think about it.
[00:26:19] It's just great. Okay, so but then you get handed this long only- Yeah ... dividend EM strategy, which is- Yeah ... what is typical. And so was that-- Do you think that that, and I hope this is okay to ask, but do you think that that was commercial? Because in other words, investors were used to that long only strategy that you just described, like here's a gem strategy and this is what they expect.
[00:26:45] And was it the idea of the long short hedge fund was too early almost like it's, it's- True. Yeah. Okay.
[00:26:52] Edward Lam: True. Uh-
[00:26:53] Stacy Havener: Which makes total sense from a business perspective. I get
[00:26:56] Edward Lam: it. It, it, it did. Having said that, [00:27:00] I personally think that, well, what the firm originally wanted was a high dividend yield strategy.
[00:27:06] Stacy Havener: Oh, okay.
[00:27:07] Edward Lam: Which, which personally I did-- And, and we had to-- We, we did fight over this.
[00:27:11] Stacy Havener: Okay.
[00:27:11] Edward Lam: And essentially, uh, I said that I will do the dividend thing, but I will only do it if it's a dividend growth strategy, not a high- Okay ... dividend strategy. The main reason being that I couldn't see a way to generate at least comparable performance in total return terms to a-another emerging market fund if you were constrained to only buying high dividend yield stocks all through the cycle as well.
[00:27:40] So that's the other issue. You know, there are definitely points in time when, when that works. Yeah. But, uh, you just don't want to have an additional kind of, um... Yeah.
[00:27:52] Stacy Havener: Parameter that
[00:27:52] Edward Lam: you
[00:27:53] Stacy Havener: have
[00:27:53] Edward Lam: to- Exactly. Constraint.
[00:27:54] Stacy Havener: Yeah.
[00:27:55] Edward Lam: Yeah. Um-
[00:27:55] Stacy Havener: Uh, super interesting. Okay. So you run that, um- And I, I
[00:27:59] Edward Lam: [00:28:00] think-
[00:28:00] Stacy Havener: Go ahead.
[00:28:01] Edward Lam: But I, I'm sort of quite, well, somewhat proud of like the achievement there that, in that we-- Uh, it was seeded with a, a million sterling.
[00:28:10] And actually, again, this is one of those things where I was seeing, you know, a couple of years later that the firm seeded another strategy, a, a small mid-cap fund with $100 million. So again, but it was still a great experience because I had to start from a million sterling. But year one, we, we built it up to 30 million and then 100 million, and then, you know, got into the hundreds and then, you know.
[00:28:35] And then by the, by peak, I was managing, uh, three and a half billion. Um-
[00:28:40] Stacy Havener: Amazing ...
[00:28:40] Edward Lam: but in that, that journey was a huge learning process.
[00:28:45] Stacy Havener: Mm-hmm.
[00:28:46] Edward Lam: Which again, actually I, I think that the other-- some of the other managers, uh, skipped and missed- Yes ... out on in a sense, because they didn't have to go up to, um, you know, uh, I don't know, Wilmslow or, or some of these other, um, [00:29:00] places and, and sort of- And, and, and actually, so, so the oth- the oth- the other experience I had- Yeah
[00:29:05] when I, when I was first, th-this is when I was first made a fund manager and I got, you know, we had this million sterling account, and I remember this. It sort of, uh... I-I put together the first trade basket to buy all the stocks that we- Mm-hmm ... were gonna buy. And I remember the broker coming back to me and said, "Oh, um, by the way, sorry, the, um, that stock in Korea that you wanna buy, it has to be a round lot, and that's not a round lot of shares."
[00:29:34] Right? So we were so small that-
[00:29:37] Stacy Havener: Ah.
[00:29:37] Edward Lam: Um, and, and actually, you know, I'm still friends with that, with that broker, and, uh, you know, she actually ended up coming to work for us- Oh, wow ... as a trader, uh, which was amazing as well because she knew the story as well. Yes. It wasn't just... Yeah. Um-
[00:29:50] Stacy Havener: Again, it's lived experience.
[00:29:51] When you have to build- Yeah ... something, which I've done multiple times, so I, I literally- Yeah. Yeah. Yeah. I smile and laugh because I know- Yeah ... when you have a million bucks- Yeah ... in a fund- [00:30:00] Yeah ... yeah, that's way different-
[00:30:02] Edward Lam: Yeah, yeah ...
[00:30:02] Stacy Havener: than when you have 100 million. And basically
[00:30:03] Edward Lam: putting... Yeah, exactly. Yeah. And put- and putting the, the trade, yeah, exactly, was, you know, a few thousand pounds or
[00:30:09] Stacy Havener: something.
[00:30:09] And EM, right? And EM, yeah. If you're trading locals- Yeah ... or whatever, like that is like- Yeah,
[00:30:14] Edward Lam: exactly ...
[00:30:14] Stacy Havener: that's crazy. So the fact that you... So, and it-- You know what's interesting about this? And this is, like, real talk. Yeah. Um, one of the qualitative things that goes into our, like, scorecard, it's not... I mean, it's, it's trying to assign like a point value basically- Yeah
[00:30:31] to a very qualitative thing, but one of the th- one of them is, has this fund manager done it before? And I'm gonna tell you- You've mentioned
[00:30:39] Edward Lam: this, I, uh-
[00:30:39] Stacy Havener: Yeah. This is... And here's why. Because if you have to go from $1 million and you get to three and a half billion, the amount of things that you've had to learn, not just as a fund manager, but as somebody who's building a business, tells [00:31:00] us a lot, right?
[00:31:02] Because you not only had- Yeah ... to be scrappy and get those, you know, that first 500, 300, whatever it is that, that really, you know, fundamental- Right ... early adopter base, you had to get them. Then you had to pivot, leap that chasm of the adoption curve, and- Yeah ... be able to speak a different language to a different investor.
[00:31:23] Speak your tip. Yeah. That's very institutional, and you know how to do that too.
[00:31:27] Edward Lam: Yeah. Al-although what I would say is that I think, um, I mean, in a sense, respect is universal, right? The, the, the... I, I, I don't personally treat the two differently, really.
[00:31:39] Stacy Havener: No. I
[00:31:39] Edward Lam: mean, that's the-- But that's... Yeah.
[00:31:41] Stacy Havener: It's... And it's not in the-- It's-- That's a great point.
[00:31:43] It's not in the way you treat them, it's in the inf- the way you present information, right? Because I would argue that that early adopter buys something different, air quotes on buys, buys something different than the institution- [00:32:00] buys when you're at $2 billion
[00:32:02] Edward Lam: Yeah. Well, they, they check different things.
[00:32:04] Stacy Havener: Yes. Right.
[00:32:05] Edward Lam: And they have- That's
[00:32:06] Stacy Havener: right ...
[00:32:06] Edward Lam: they have different questions and they... Yeah. Yeah, absolutely. S-
[00:32:09] Stacy Havener: and so you still treat the early adap- and from, from my point of view, you still treat that early adopter conversation and that early adopter firm or individual the same way with the same gravitas and the same- Yeah
[00:32:23] academic-
[00:32:24] Edward Lam: Yeah ...
[00:32:25] Stacy Havener: intellectual capacity It's just that you have more
[00:32:26] Edward Lam: gratitude.
[00:32:27] Stacy Havener: Yes. It's just- Actually ... they also might wanna know who you are as a person and what you're trying to build and all these things, versus later on the questions are different and the, the boxes, the check boxes are different. Yeah.
[00:32:37] Right?
[00:32:38] Edward Lam: So- To be fair, I think the, the good big institutions are just as attentive to the personal side, but they do have a whole host of other additional- Yes ... things.
[00:32:48] Stacy Havener: They have other parameters, to use that again. Yeah. They have a different framework. Yeah, yeah. They have d- different bosses that they, you know, not just- Yeah
[00:32:58] their manager or [00:33:00] boss, but also a client who has different needs and, and all of the above. Okay. So you're now... You're running this long only strategy, so you eventually leave Somerset, and eventually- Yeah ... you come to, to where you are now. But what was that journey?
[00:33:17] Edward Lam: So I mean, this is, this is sort of a universal thing, but I think that, uh, success in fund management firms often breeds problems.
[00:33:25] Mm-hmm.
[00:33:26] Stacy Havener: And
[00:33:26] Edward Lam: like Somerset was, was no different. I mean... And so in 2015, we had this big discussion when, when Somerset was basically taking off and, and we, we'd- the- we- at that point, we were about $6.5 billion under management, of which 2 was in my fund, another 2 was in the kind of the older original product, and then miscellaneous assets in, in other products.
[00:33:53] At that point, essentially, I think that the rest of the team had a view that I'd taught [00:34:00] them all that they needed to know. And so there was this discussion about how to restructure the firm and what to do about it. And, you know, one of the proposals had been that I could be CIO.
[00:34:12] Stacy Havener: Hmm.
[00:34:13] Edward Lam: Uh, but actually what's end- what ended up happening is that we split the teams and I, I got to kind of run my own team, or ostensibly run my own team, and the rest of the firm kind of then was allowed to do their own thing.
[00:34:25] And I would say that to be honest, that was kind of the beginning of the end.
[00:34:27] Stacy Havener: Yeah.
[00:34:28] Edward Lam: Um, and generally, they ended up making things just quite difficult for me at that point. So for the next four years or so, you know, don't need to go into details, but it wasn't a particularly happy experience.
[00:34:40] Stacy Havener: Yeah.
[00:34:40] Edward Lam: And was also particularly frustrating because by that stage you have a huge number of clients who you're responsible to, and at the same time you actually can't tell them what's really going on-
[00:34:53] Stacy Havener: Yeah
[00:34:54] Edward Lam: or, or why you're having to do this rather than that or, um-
[00:34:57] Stacy Havener: Yeah
[00:34:58] Edward Lam: And yeah, so [00:35:00] that was just a particularly, from my point of view, the last three or four years at Somerset was just not very pleasant at all.
[00:35:08] Stacy Havener: Yeah.
[00:35:08] Edward Lam: And then I left in 2020, and I didn't actually intend to come back to the industry. So I
[00:35:14] Stacy Havener: was- Really?
[00:35:15] Edward Lam: you know.
[00:35:15] Stacy Havener: It was that-
[00:35:16] Edward Lam: You know.
[00:35:16] Stacy Havener: Yeah. Wow, okay. Well, I was gonna-
[00:35:18] Edward Lam: What were you gonna do? I think I just, I just needed rest and-
[00:35:21] Stacy Havener: Yeah ...
[00:35:22] Edward Lam: recharge and, um, yeah. Uh- That,
[00:35:24] Stacy Havener: you know what? Like, I really appreciate you sharing that, and it's gonna sound totally lame and cliché that I say this, but something tells me that if you hadn't gone through that experience, you'd be different.
[00:35:37] Edward Lam: Probably, yeah.
[00:35:38] Stacy Havener: Yeah. Because that sounds, I can only imagine, but I've seen that play out, and I will say that typically what you said is very true, right? The asset growth of, of a firm- Yeah, exactly ... will ultimately create the next breakaways, and there are a lot of us who just wait- Yeah ... for that to happen, because if you love that setup like I do, you're [00:36:00] like, "Hey, here we go.
[00:36:00] Someone's gonna leave that shop soon, because that's way too big," right? Yeah. Or whatever.
[00:36:05] Edward Lam: Which, yeah. Yeah. But
[00:36:05] Stacy Havener: ty- but, you know, typically-
[00:36:07] Edward Lam: But it's also the life cycle. Th- there's general, as a general rule, irrespective of individual characteristics or motivations, at the start everyone is working on the same goal.
[00:36:18] Stacy Havener: Yes.
[00:36:18] Edward Lam: Yes. Because you have no money.
[00:36:19] Stacy Havener: Right.
[00:36:20] Edward Lam: As soon as you've got money there, characters come out. It j-
[00:36:23] Stacy Havener: Yes, that's what I was
[00:36:24] Edward Lam: gonna say. You know? It's, it's not, it's not even that they change.
[00:36:26] Stacy Havener: No.
[00:36:27] Edward Lam: It's the, it's that the, the actual characters, whoever one actually was-
[00:36:31] Stacy Havener: Reveals ...
[00:36:32] Edward Lam: reveals itself.
[00:36:33] Stacy Havener: 100%.
[00:36:34] Edward Lam: So, yeah.
[00:36:34] Stacy Havener: And, and so, and- I'm so glad to-
[00:36:36] and that is, I'm, I'm so on the same page as you, because I have had scenarios where we've had this exact thing. Like, we, we- Yeah ... all were aligned to start with seed capital and build something really amazing, and we do, and then all of a sudden it's like, what now?
[00:36:54] Edward Lam: Yeah.
[00:36:55] Stacy Havener: And you just- Yeah, yeah ... can't believe the decisions- Yeah
[00:36:57] and the, the- Exactly ... the opposing points
[00:36:59] Edward Lam: of [00:37:00] view. And, and so, and, and one of the things, one of the big things that I, I suppose I learned from that is that you can't change people.
[00:37:07] Stacy Havener: No.
[00:37:07] Edward Lam: In that I... And, and actually I, I would say that one of the reasons I stayed so long was that I actually thought- Mm ... that this was fixable.
[00:37:15] Yeah. That, you know, things could change, or that people wouldn't behave in, in a certain... Or, or they, they could understand their own self-interest. I mean, that's the other surprising thing is, is to the, the extent to which people were willing to actively go against their own self-interest. Mm. Uh, th- this is a...
[00:37:33] One incredible example was, uh, there was a tender coming up for an investment trust, and, and Somerset didn't have an investment trust mandate. But I'd found out about it through just kind of network of, of people. I think the marketing team was slightly annoyed that they hadn't found it, so they couldn't, you know, get their hands on it or...
[00:37:53] And with the approval of the CEO- I started to put together a pitch-
[00:37:57] Stacy Havener: Mm ...
[00:37:58] Edward Lam: to, you know, be the [00:38:00] manager of this investment trust, an emerging market investment trust. Mm-hmm. And these opportunities don't come up-
[00:38:04] Stacy Havener: Yeah ...
[00:38:04] Edward Lam: very often. And I also got a soft kind of, um, you know, verbal from one of the board members of this trust saying, uh, "It's great that you've, you know, you've put your h-hat in the ring 'cause Somerset's a respected brand," and essentially there's one other, you know, big fund management firm that, that the board likes that are applying, but, you know, it's kind of between you two.
[00:38:27] Stacy Havener: Mm-hmm.
[00:38:28] Edward Lam: Um, and so I worked on this actually for months, and I put together the whole proposal, and the evening before I was, you know-- And I was about to send, and I-- b-before the, the deadline pr-proposal, I sent the proposal to my CEO for one last check over. Mm.
[00:38:46] Stacy Havener: And
[00:38:46] Edward Lam: said, "Look, this is now the completed proposal.
[00:38:48] You've seen it through different iterations."
[00:38:51] Stacy Havener: Mm-hmm.
[00:38:51] Edward Lam: Uh, and then he said to me, "No, I'm sorry, we're not doing this." I said, "Why? Well, you've, you've had th- this has been on your desk, [00:39:00] you know, in different iterations for the last, like, few months." And he, he never gave me a reason, but it was just, you know, just to spite me that he didn't want me to have more business.
[00:39:10] And, and obviously at the end of the year, he, he said, "Oh, you know, Ed, you, uh, you haven't, you haven't done any, any new business this year." So- You're like, "What?" Anyway. But
[00:39:19] Stacy Havener: that- I--
[00:39:19] Edward Lam: You know, so here's
[00:39:21] Stacy Havener: the thing. You are not alone, as I'm sure you know, that these are- Right ... stories that I hear, you know-
[00:39:27] Edward Lam: Yeah ...
[00:39:28] Stacy Havener: over and over again.
[00:39:29] And, and I want to just say something about that last comment, because I've heard this from other fund managers as well, which is this push me, pull you of like, well, you're responsible for generating performance. But then somewhere along the way it's like, and you're also responsible for raising assets.
[00:39:48] And you are. And, and you're like, "Well, wait, wait a minute. Like, that wasn't, that wasn't the deal." Yeah. How did the deal just change?
[00:39:53] Edward Lam: Yeah.
[00:39:53] Stacy Havener: And, and then but also, like, so-
[00:39:56] Edward Lam: Yeah ...
[00:39:56] Stacy Havener: you know, that's-- So you-- That's when you know, like, this is, you know, [00:40:00] this is obviously not gonna
[00:40:01] Edward Lam: go- And I, I don't, I don't mind- And it's fine
[00:40:02] with being responsible for- Yeah ... for lots of different things. But- But then just let me do it.
[00:40:07] Stacy Havener: Well, right. Then you can't, you can't tell me I can't do it. Okay. So I'm glad you didn't leave the industry, but I ou- I also very much understand, and just in the, in the quid pro quo of sharing, I also very much understand when you need a break because I got very jaded on capital raising.
[00:40:26] I'm better now, but I'm still a little hurt by it. Um, so I understand the feeling of working really hard to do something and feeling-- I think for me, I just got to a place where I was like, it's never enough. And we're helping firms when they have nothing. Like, they don't have a shot in hell, and we're there doing all this hard work, and it's never enough, and there's no gratitude.
[00:40:52] And I was like, "I have to get out of it or I'm, like, literally gonna turn into, like, an angry bird." Um, and [00:41:00] so I think we all... It's, it's- And
[00:41:02] Edward Lam: what, what did you do?
[00:41:04] Stacy Havener: I said, "I'm not doing that anymore." You took time off. I, I just said, "We're out of that business." I know,
[00:41:08] Edward Lam: but, but then you, you took a break as well, or you
[00:41:11] Stacy Havener: didn't get a break?
[00:41:11] I think, you know, it's a great question. I, I personally had to step away because I was starting to get resentful of-
[00:41:18] Edward Lam: And you're b- and, and, and fortunately, actually, I, I know this and I, and I it's sort of... I regret, you know, m- my behavior certainly changed as well. Yeah. It's 'cause you're, you're just constantly tense.
[00:41:28] Stacy Havener: Yes.
[00:41:29] Edward Lam: As opposed to- I was
[00:41:29] Stacy Havener: like pissed off all the time. I was resentful. I had a very short fuse, a quick trigger. Like, somebody said something, I'd be like, "That client is out." And they'd be like, "What do you mean?" Like, and I'm like, "No, I've seen that behavior before, and I'm not d- I'm not putting up with it.
[00:41:43] I'm not putting our people through it. So that client's off the roster." Yeah. And it was like, "You're firing everyone." So that's when I was like, "Maybe you should keep me away from that business because- Yeah ... I'm not in a good head space around it." Mm-hmm. And so I actually said to our team at one [00:42:00] point, and I'm coming back from this whole thing, I said to our team at one point, "My new currency is gratitude."
[00:42:07] Yeah. "I don't care about the dollars. If you're grateful and you appreciate our help, I will run through a wall for you. I don't care how much money you have to spend." Now I'm sort of like, "Okay, well, maybe I could just have, like, grateful dollars. Like, could I have both and not just, like, go totally away from the commercial side?"
[00:42:25] But, but I think we all, like, again, you're not alone. Like, we all have experiences on that journey, if we're honest and real about it, that make us question, you know, "What am I doing? What am I doing?" Now, the good news is for both of us, so I haven't fully come back into capital raising, but I'm still here and you're still here.
[00:42:47] Yeah. So what brought you back in?
[00:42:50] Edward Lam: So again, just a chance, and couple of years later, this is end of 2022, an ex-colleague actually gets in touch with me and says, "Oh, by the way, [00:43:00] Sloan Robinson are looking to hire. They're looking to rebuild." So th- they had gone through a whole-
[00:43:07] Stacy Havener: Yes ...
[00:43:07] Edward Lam: kind of restructuring.
[00:43:08] They used to be a, well, uh, yeah, a big brand in emerging markets and in h- in hedge fund business. Uh, but they're looking to relaunch and start a new fund, an emerging market fund. You know, "Would you be interested?" And the truth is that I still wasn't necessarily interested. Mm. Mm-hmm. But, uh, I'd heard so much about Sloan Robinson, even from when I first started in the industry in 2004.
[00:43:37] They were already legends, so I- I basically just wanted to meet them Oh,
[00:43:41] Stacy Havener: I
[00:43:41] Edward Lam: love that ... was, was the first. Yeah. Uh-huh. Um, because it's, you know, it's, it's... Yeah, it's just a- amazing to, to just put faces to people you heard about trading, right?
[00:43:52] Stacy Havener: Mm-hmm.
[00:43:52] Edward Lam: Uh, 'cause at, at Lord Mandlem I still remember one of my first weeks in the office, people kind of not whispering, but talking about, [00:44:00] "Oh, did you hear that Sloan Robinson did this trade in this company or something or other?"
[00:44:04] Mm-hmm. You know, or they've made a whole lot of money in doing that. Um, so I just wanted to meet them. And obviously I met them, and I also just, I suppose, had a good feeling about-
[00:44:14] Stacy Havener: Yeah ...
[00:44:15] Edward Lam: it and was willing to sort of give this a go. So what I ended up saying to them, and I'm really grateful to them for allowing this, but I said to them, uh, "Well, why don't we try if I-- why don't I come in one day a week-
[00:44:29] Stacy Havener: Mm-hmm
[00:44:30] Edward Lam: and let's see how it goes."
[00:44:31] Stacy Havener: Yeah.
[00:44:31] Edward Lam: So, you know, a- again, imagine that because I wasn't gonna, you know, there wouldn't be many other places, if any, that, that would really want to bother with that.
[00:44:41] Stacy Havener: Mm.
[00:44:41] Edward Lam: Um, but it was definitely the right thing for me at the time. So at the beginning of 2023, I, I started coming in one day a week, and to be honest, immediately, you know, remembered what I liked about-
[00:44:53] Stacy Havener: Oh, yeah
[00:44:54] Edward Lam: just doing the research-
[00:44:55] Stacy Havener: Yeah ...
[00:44:55] Edward Lam: and kind of coming up with ideas, and just being immersed in thinking about [00:45:00] interest rates and markets and, and stocks and valuations and... Yeah. And so quite quickly I realized, okay, I, I do want to do this, but I wanna ease myself in. And so we kind of decided that September '23 I'd start full time, and then we'd launch the fund in, at the beginning of 2024.
[00:45:19] And so we, and then we went from there. Um-
[00:45:21] Stacy Havener: And it was long-short.
[00:45:23] Edward Lam: And it was long-short, yeah. Um- So that was something- Which is what they've always done, which is- Yeah ... which is great.
[00:45:28] Stacy Havener: And what you wanted too.
[00:45:30] Edward Lam: Absolutely. But also more than anything else, it's working with these founders who have the same general perspective.
[00:45:41] Um, and it's two things. One is that they love what they do.
[00:45:45] Stacy Havener: Mm.
[00:45:45] Edward Lam: Because, you know, and they could be... They don't have to be working. Yeah,
[00:45:49] Stacy Havener: right.
[00:45:50] Edward Lam: Um, in fact, you know, I was just talking to one of them today and, and I've been pushing Hong Kong real estate stocks, for example. Uh, he is in [00:46:00] Hong Kong. He has just met one of the companies that, that I've been talking about, um, New World Development.
[00:46:05] And because we didn't get, uh, long enough to chat, he said, "Okay. Well, d- don't worry. I'll, I'll write up my notes for you." But he, again, because-
[00:46:12] Stacy Havener: He
[00:46:13] Edward Lam: loves it. Yeah, exactly. And that's important. And the, but the other thing that's important is that whilst they wanted me to do an emerging market strategy, so coming back to-
[00:46:23] Stacy Havener: Mm-hmm
[00:46:23] Edward Lam: um, when I started presenting to them the idea that it might not be exclusively emerging markets or... I mean, I, I, I still, I remember the, the, the model portfolio I, I first put together for them. It was sort of branded emerging markets- But then I put in Unicredit Bank, which is an Italian bank. Mm. And I remember getting this sort of, "Hmm, what's this doing here?"
[00:46:44] What's this?
[00:46:46] Stacy Havener: Yeah.
[00:46:46] Edward Lam: Yeah. And so, um, I had to sort of explain my concept of subordinate currency regimes- Ah ... and all this sort of stuff. But the bottom line is th- is that there was sort of, uh, an open-mindedness, and also, uh, as [00:47:00] long as things are kind of done in an intellectually rigorous way, and again, that we can...
[00:47:05] That they can relate to, and which, you know, so that's where we were at, it can all make sense. And that- Mm-hmm ... you know. And then not least, if, if we can make money from these ideas, then we should somehow try to incorporate them into what we do, and that's just been also incredibly important for me and personally because honestly, if I were at another firm expected to run an emerging market fund, where last year I would not have been allowed to invest in Spain or Italy-
[00:47:33] Stacy Havener: Mm
[00:47:34] Edward Lam: I probably would've just quit because I was so convinced about the market opportunity.
[00:47:39] Stacy Havener: Mm-hmm.
[00:47:39] Edward Lam: Um, and, and that's important to me that, that if, if you, if you genuinely think you have an edge and you have evidence as to why you, you've got that, then you, you may as well apply it. But I, I see no up- sort of downside to, um, to, to at least testing it out even in small size.
[00:47:58] Stacy Havener: Yeah.
[00:47:59] Edward Lam: So... [00:48:00]
[00:48:00] Stacy Havener: You know, it's so interesting to me because when I think about authenticity, I, I often... I guess, I don't know. I, I haven't consciously thought about that sort of from an investment philosophy perspective. I more often think about it- Hmm ... like from a human perspective. From a narrative sort of unit, yeah.
[00:48:20] If you're in a situation where you're feeling like this is not, not authentically who you are, that's a bad situation. But what you just described is a different type of authenticity, isn't it? Yeah. Because you, if you build a portfolio that has a lot of rules, then you're investing in an inauthentic way to a certain extent- Yeah
[00:48:39] or potentially.
[00:48:40] Edward Lam: Totally, and you've totally nailed it because... And that's kind of what I felt when I was doing the dividend growth fund- Yeah ... at Somerset because I had all these ideas about banks and banking cycles, and I was essentially shoehorning them into a dividend-
[00:48:56] Stacy Havener: Yeah ...
[00:48:56] Edward Lam: framework. And whilst I [00:49:00] could...
[00:49:00] You could sort of do that-
[00:49:01] Stacy Havener: Mm ...
[00:49:01] Edward Lam: but it's exactly as you said, it's inauthentic.
[00:49:04] Stacy Havener: Right.
[00:49:04] Edward Lam: Uh, yeah.
[00:49:06] Stacy Havener: Which is why you wanted- And then- ... unconstrained, which is what... And you know, here's what's really interesting about this because I also can put my business hat on and say, "Okay, if I'm at Sloan Robinson, maybe I'm less...
[00:49:18] I'm not letting the commercials... The tail's not wagging the dog here," right? Yeah. The commercials aren't driving the, the business decisions or the investment decisions. Um, but what I've often found With especially, you know, I would say if I had a sweet spot for fund managers, the- it's the ones that are very, very intellectual, very smart, wicked smart, struggle to translate that into commercials.
[00:49:48] Um, that's like my favorite thing. Yeah. The more awkward and sort of like the more I'm like, "I totally get you, and I can help you translate this. If you trust me, we're gonna kill it," right? So because [00:50:00] oftentimes it goes back to our, the beginning where we d- we, we undertook the, the rebranding exercise of, of emerging markets, right?
[00:50:10] So, and we need work on our language, but, but the idea is coming back here because oftentimes it makes sense. There is an architecture and there is an overarching philosophy around the strategy. It's just that it doesn't exactly match what everyone else is doing, and when that happens, it's fine. It just requires us to do the work to explain what that overarching- Yeah
[00:50:38] architecture is and redefine it. That's right. Right? Yeah. So it's a, it's a little bit more work, but I think where, where it can break is if the business is like, "No, no, this isn't commercially viable. Why are you saying that?" Exactly. "It needs to be this way." And you're like, "Well, no, from an, from an investment perspective, it is exactly the way that I believe it should be [00:51:00] done.
[00:51:00] It's not my job to figure out how to make that commercial." But that can be a really tough- Yeah ... disconnect. S- if you're a very intellectual, thoughtful portfolio manager, that can be very tough.
[00:51:10] Edward Lam: No, I... That's right. Um-
[00:51:12] Stacy Havener: And you're in a place where they're giving you the... And which just goes to show that this whole idea of people doing business with people, it's not just-
[00:51:20] Edward Lam: Yep
[00:51:21] Stacy Havener: from a business to a client perspective. It's actually within the four walls of the company.
[00:51:26] Edward Lam: Yeah. Absolutely. That's absolutely true. And, and then again, it's, it's partly 'cause they have a, they have a confidence in themselves that, that makes, you know, um, and they're sure in their judgment. And again, you know, I suppose they can, they can see how I put together the ideas and, and, you know, they're willing to back it.
[00:51:44] Stacy Havener: Yeah.
[00:51:44] Edward Lam: And that... Uh, but it's, but it, um... Or, or to try and articulate it more sharply, it's, it's that it can work because, like I said, they, they have a confiden- confidence in their own judgment.
[00:51:54] Stacy Havener: Right.
[00:51:55] Edward Lam: They're not looking at, "Oh, well, what does the benchmark say?" Yeah,
[00:51:59] Stacy Havener: they don't- "
[00:51:59] Edward Lam: [00:52:00] What, what do our peers, what do our peers think?"
[00:52:02] Yeah. Like, um, you know, and to a certain extent for them, and which is great, like, you know, this is what I love, you know. It's like who ca- who cares? Right. We don't care about them. We... And also partly because they've done it all before. Like, so George Robinson, I mean, this is, you know, I didn't know this until I joined, but...
[00:52:20] And he didn't tell this story. It was someone else who told this story. I don't know if you know this company Dragon Capital, but Dragon Capital is- Now one of the biggest fund managers in Vietnam.
[00:52:30] Stacy Havener: Okay.
[00:52:30] Edward Lam: And they've run one of the largest funds there. And way back when, uh, the founder of, um, Dragon Capital is Dominic someone or other, uh, George Robinson actually took that founder on his first trip to Vietnam.
[00:52:47] Stacy Havener: No way.
[00:52:48] Edward Lam: So... Which, which is incredible, right? So, but again, this is, this is where this, um, having done it all before and knowing what-
[00:52:57] Stacy Havener: Mm-hmm ...
[00:52:57] Edward Lam: knowing really what an emerging market [00:53:00] was and a frontier market, you know, was, there is a... Yeah, there's a certain amount of confidence that, look, back in the day, we essentially created this, um, asset class.
[00:53:12] So who's to say we shouldn't redefine it once again?
[00:53:15] Stacy Havener: Mm-hmm.
[00:53:16] Edward Lam: Right?
[00:53:16] Stacy Havener: It-- That takes a lot of courage and confidence, as you said. Yeah. And I also think, you know, for all the knocks on hedge funds, and I'm, and I'm guilty of that too, you know, this idea of like, oh, here's my website, it's a landing page and an address and a skyline of New York City or whatever, and you're like, wow, okay.
[00:53:35] Uh, and-
[00:53:35] Edward Lam: Yeah. We, we, we're actually build- building that right now. We, we felt- ... put together a landing page and a- Perfect ... and a skyline.
[00:53:41] Stacy Havener: Yeah.
[00:53:42] Edward Lam: Good. Yeah.
[00:53:42] Stacy Havener: That's great. Um, so there's like... there's all of that, but, but in their original form, if you really- Yeah ... think about what they were designed to do, it's what you're describing.
[00:53:55] It was the like, I don't care what the benchmark is doing, and [00:54:00] in fact, the fact that I- Yeah ... don't care allows me to generate alpha for my investors. Yeah. And that's what the purity, the sort of original essence of a hedge fund and that culture and that ethos was that. Agreed. Then it sort of turned into a big business and, you know.
[00:54:18] Edward Lam: And it was an industry, exactly.
[00:54:19] Stacy Havener: Yeah.
[00:54:19] Edward Lam: That's... Yeah.
[00:54:20] Stacy Havener: It changes. Yeah. It sounds like you're still in a place that has that original ethos, which is really amazing and awesome.
[00:54:27] Edward Lam: Yeah. But, but again, I'm... because I'm, I'm lucky to be working here because... And they started with it, you know, because they're, they started this firm in 1993.
[00:54:35] Um- Right ... you know, quite early on and, you know- Which was the, was
[00:54:40] Stacy Havener: that era of
[00:54:41] Edward Lam: the
[00:54:41] Stacy Havener: original-
[00:54:42] Edward Lam: Yeah. And, and certainly for- Yeah ... and, and certainly for international markets and emerging markets, again, they were, you know- Oh, yeah ... definitely one of the first.
[00:54:49] Stacy Havener: Yeah.
[00:54:49] Edward Lam: So.
[00:54:49] Stacy Havener: This, I could literally talk to you for hours.
[00:54:52] This has been so fascinating, and also one of my favorite things is when the conversation doesn't follow e- like I give [00:55:00] people questions- That's it ... because especially in this industry, no one likes to be surprised, so they feel like if they have the questions, even if we don't talk about those questions exactly, they just feel that they've prepared.
[00:55:12] Um, but my favorite is when the conversation just happens organically, and this is one of the most organic conversations I've ever had on this podcast, and the most investment. I don't normally do the investment thing- ... um, because I wanna focus on the people. But it was just such a nice way to weave both of those stories together, so you did a fantastic job.
[00:55:34] I do have s- a couple questions for you, if I might. Sure. I'm actually nervous about where this is gonna head with the first one- Yeah ... because you're, like, a voracious reader, I can already tell. So the first question is, and I will reword it a little bit to say, you can do-- Doesn't have to be an investment book, but a book that inspires you, and if you're like, "I have so many"- Yeah
[00:55:55] then you can do a recent one.
[00:55:58] Edward Lam: I, I, I, no, I love this [00:56:00] question. Uh, there are several.
[00:56:03] Stacy Havener: I knew. But- I was like, we, yeah.
[00:56:04] Edward Lam: Um, uh, o- o- one of, one of the ones I kind of come back to a lot, because I'm obsessed by, uh, the Austronesian diaspora, is this book called "Man's Conquest of the Pacific" by- Okay ... a guy called Bel- Bel- Belwood, who's a sort of archeologist, anthropologist.
[00:56:23] But basically, I mean, you don't even have to read that book, but w- w- why it's inspiring is, is that, uh, you had these, I don't know what you would want to call them, but they, um, a migrant population circa, I'm gonna get these dates wrong, but- Yeah,
[00:56:39] Stacy Havener: that's
[00:56:39] Edward Lam: okay ... 1000 BC, uh, starting in Taiwan or Formosa, and they basically fanned out across the Pacific all the way to the Easter Islands and to Hawaii-
[00:56:55] Stacy Havener: Huh
[00:56:56] Edward Lam: in canoes, in, you know, basically those... And then, [00:57:00] and they also even made it all the way to Madagascar, and this is all established kind of, you know, through archeological and linguistic evidence and all this sort of stuff. And it just, to me, it's inspiring, you know, that I think what, what people have always been aspiring to do.
[00:57:18] You know, imagine being there on, on the shores of, you know, wherever it is in, in Fiji and thinking, uh, "I wanna get to the next islands in this canoe." And then somehow making it, you know, to the Easter Islands or whatever it is. Um, anyway, so that to me
[00:57:34] Stacy Havener: is- I-- That's so Fascin- I mean, also never been said, uh, as you can imagine, on this podcast.
[00:57:41] Um, but, but what I think is interesting about it is that you're gravitating to something or you're finding inspiration in something that is incredibly-- takes incredible bravery, incredible courage, has no known roadmap, uh, in a vessel that- [00:58:00] Yeah ... you know, maybe is- ... or is not exactly seaworthy, and yet you have people who are willing to do that.
[00:58:10] Edward Lam: Yeah.
[00:58:10] Stacy Havener: It's awesome. Okay, let's go from books to places. What place inspires you?
[00:58:17] Edward Lam: Inspires me? Mm-hmm. Um,
[00:58:19] Stacy Havener: es-
[00:58:20] Edward Lam: but again, I, I, I can't stop on the archeology. The pyramids. Um, you know, so that would probably be a-
[00:58:27] Stacy Havener: Wow ...
[00:58:27] Edward Lam: again, you know, the, the sort of-- But that's more, more of an obvious, um, answer. But again, like, I think it's always, you know, it's one of those childhood things as well, you kinda think about what- Mm-hmm
[00:58:38] what is it, what is it they were doing? And again, that, that to me is, is, is also often the way I, I kinda think about things or do things. It's
[00:58:48] Stacy Havener: like- Okay, s- so I love that. Now I'm gonna-- the comma after that question in the notes- Sure ... is what's your happy place, which I'm guessing is gonna be a different answer unless you go to the pyramids a lot.
[00:58:58] Edward Lam: No, no, no, no, no. Um, [00:59:00] that would probably just, that would probably be s- something like the, just being on a tennis court. Oh, you
[00:59:06] Stacy Havener: play tennis? On a
[00:59:07] Edward Lam: sunny day. Yeah.
[00:59:08] Stacy Havener: Yeah. Cool. Um- So, um, well, here's like a total how do you feel about pickleball? I don't know what you call it over there. Do you call it that?
[00:59:16] Edward Lam: You call-- We-- Yes.
[00:59:18] Uh, I've never played.
[00:59:20] Stacy Havener: Yeah, because is it one of those things-- I mean, I, I play neither. I don't play any racket sports. But is it one of those things that, like, if you're a purist in tennis, you think pickleball is like...
[00:59:29] Edward Lam: So, so, so, so this is the thing. Uh, it, it's-- I, as I, as far as I know, and, and, and I know a bit more about paddle, which I also haven't played, but I, you know, um-
[00:59:39] Stacy Havener: Is that, is that the same thing as pickleball?
[00:59:41] Edward Lam: No.
[00:59:42] Stacy Havener: No, it's not.
[00:59:42] Edward Lam: It's different. Okay,
[00:59:43] Stacy Havener: wow.
[00:59:43] Edward Lam: But, but they're related.
[00:59:44] Stacy Havener: Okay.
[00:59:44] Edward Lam: Um, essentially, the way I see it, uh, the, the reason why tennis is unfortunately less accessible is that tennis is a bit like golf. It really matters how you hit the ball.
[00:59:58] Stacy Havener: Mm. Um,
[00:59:59] Edward Lam: [01:00:00] whereas paddle, it doesn't matter so much how you hit the ball, it just matters where you hit the ball.
[01:00:05] And so-
[01:00:06] Stacy Havener: That you hit the ball.
[01:00:07] Edward Lam: That you hit the ball. But, but, but, but it means that, that the strategy is divorced from your skill level- Ah ... of hitting.
[01:00:15] Stacy Havener: Okay.
[01:00:15] Edward Lam: Whereas in, in tennis, you have to be able to hit the ball with a, with a certain level of skill to be able to access the strategy, if that makes sense.
[01:00:24] Stacy Havener: Wow. Yeah, that makes
[01:00:25] Edward Lam: total sense.
[01:00:25] Stacy Havener: Right. So,
[01:00:26] Edward Lam: but what that means is that, for me anyway, the kind of, if you want, like, the mindfulness or the comes from- Kind of from the actual process of hitting and just feeling the physical-
[01:00:41] Stacy Havener: Mm. -
[01:00:42] Edward Lam: side of things, right? And just sort of letting yourself go on the court in that way, as opposed to thinking through the strategy and-
[01:00:49] Stacy Havener: Yeah, yeah.
[01:00:50] Edward Lam: Um, it's like driving a car.
[01:00:52] Stacy Havener: Yes.
[01:00:52] Edward Lam: You've got, you know, you, you sort of or, you know, you have to concentrate, but you're also on autopilot.
[01:00:56] Stacy Havener: Yeah.
[01:00:57] Edward Lam: Um-
[01:00:57] Stacy Havener: And when you hit the ball the exact right way, [01:01:00] you're like, "Oh yeah, that, that I know-" It
[01:01:01] Edward Lam: just feels- "...
[01:01:01] Stacy Havener: like that feeling."
[01:01:02] Edward Lam: Right.
[01:01:02] Stacy Havener: Yes.
[01:01:03] Edward Lam: Exactly. There's a feeling.
[01:01:04] Stacy Havener: I, I just watched the F1 movie twice- Yes
[01:01:07] 'cause it was so good. Yeah. I watched it on the way to Jamaica, and I watched it- Okay ... on the way home because I get obsessive like that. Yeah, yeah. So I watched it on the way home. And remember- Were
[01:01:15] Edward Lam: you always an F1 fan, or were you-
[01:01:16] Stacy Havener: No, I'm not an F1 fan at all. Okay. So this is, like- Okay ... totally new territory for me.
[01:01:20] Um, but I love cars, so I have- Okay. Yeah, yeah ...
[01:01:24] Edward Lam: that.
[01:01:25] Stacy Havener: But you know the part where he says when she, when he-
[01:01:28] Edward Lam: I have not watched it.
[01:01:28] Stacy Havener: You haven't? Oh, well there's a part in it. Yeah. Okay. It's very good. It's a very good underdog story, and also it has like a-- There's like, because of the way these cars are designed and how much engineering goes into them, and it's kind of also jazzy and cool that way.
[01:01:43] But, but she asks him, like, "Why are you doing this?" And he says, he describes this feeling that doesn't happen often of driving the car and sort of being in the zone, and he says, "And it feels like I'm flying." And- Yeah ... that feeling- Yeah ... right? Like y- Exactly. [01:02:00] Yeah ... if you know that feeling, you're like, "Oh, I know that feeling."
[01:02:01] Yeah, yeah. "I know what he's talking about right there." Yeah. Yeah. I get it. All right. Okay, you're going to-- As it turns out, your rebrand on emerging markets is going through, and you're going to be presenting at a conference.
[01:02:14] Edward Lam: Oh, I see. Yeah.
[01:02:15] Stacy Havener: Uh-huh. You're gonna be taking- Okay ... the stage to explain the rebrand of emerging markets- Okay.
[01:02:20] Okay ... to the subordinated currency regimes.
[01:02:23] Edward Lam: Yeah.
[01:02:23] Stacy Havener: And before you walk out on the stage- You're
[01:02:25] Edward Lam: gonna have to work with me on that. Yeah,
[01:02:27] Stacy Havener: totally. Um, okay, so but anyway, you're gon- Anyway. It's, it's basically what's your hype song? What are they gonna play when you take the stage?
[01:02:35] Edward Lam: So, so I'm gonna, I'm gonna, I'm gonna cheat.
[01:02:37] Uh-
[01:02:37] Stacy Havener: Uh-oh.
[01:02:37] Edward Lam: My, my, my, my, my son DJs. He, he creates- No way ... music and, and, uh, I actually really like his stuff. So, uh, but, uh, but so and one of his tracks is, is called "Starting Over."
[01:02:49] Stacy Havener: Hmm. Um, and
[01:02:50] Edward Lam: it's... Yeah. It's a bit of fun, but I would- Is this
[01:02:52] Stacy Havener: on Spotify?
[01:02:54] Edward Lam: No, sadly not. Is
[01:02:54] Stacy Havener: it on YouTube?
[01:02:56] Edward Lam: I can share it with you.
[01:02:57] Stacy Havener: Yeah. I would love to hear it. Yeah, yeah. Okay. That's so fun. I [01:03:00] love that. I hope you tell him that, you know, his, his song was your walkout anthem in a podcast today.
[01:03:06] Edward Lam: Sure. He, he, he's 10, but, you
[01:03:08] Stacy Havener: know. That's fine. 10-year-olds love that. Yeah. Uh, that's amazing that he's doing that at 10. Okay, here we go. What profession other than your own would you like to attempt?
[01:03:19] Edward Lam: Uh, there's been a few things that I've, um... I mean, actually, before I started in the-- I mean, I, I, I, I applied but failed to be, uh, to join the police, um, which was a, uh... I don't wanna do that anymore, I don't think. But, um- I think that potentially I, I was interested in getting into, to art. Ah. Um, this was when I was on, on my break.
[01:03:45] I didn't manage to pull the trigger on, on sort of doing a, an art course or whatever. But, um, yeah. Well, what
[01:03:51] Stacy Havener: was the- I might do that ... what was the motivation for police?
[01:03:56] Edward Lam: I thought it might be, um, provide a bit of structure in my life. [01:04:00]
[01:04:00] Stacy Havener: Wow. That's-
[01:04:02] Edward Lam: Yeah ... that, that-
[01:04:03] Stacy Havener: But
[01:04:03] Edward Lam: then I was naive and young.
[01:04:04] Stacy Havener: Yeah. Well, that's okay.
[01:04:05] That's still-- That's super interesting, from police to art to investments. It's like a renaissance. Okay. What profession would you not like to do?
[01:04:16] Edward Lam: So again, I think this is-- I think, I think the, the, the worst thing that I could possibly imagine, unfortunately, is, is to, is to be, is to, is to be, is to be in the...
[01:04:26] stuck in the asset management industry where doing, doing an emerging market product.
[01:04:31] Stacy Havener: I
[01:04:32] Edward Lam: knew- That is totally-
[01:04:34] Stacy Havener: High dividend yield, long only.
[01:04:36] Edward Lam: Something, whatever. Any- anything like that. And, and maybe- That is so
[01:04:41] Stacy Havener: good ...
[01:04:41] Edward Lam: with some ESG thrown in. Uh...
[01:04:42] Stacy Havener: Oh, thr- oh yeah, let's have an overlay on that too.
[01:04:45] Edward Lam: Yeah.
[01:04:46] Stacy Havener: Oh my God, that was amazing.
[01:04:47] Okay. Well, this is a long time from now, but what do you want people to say about you after you've retired or left the industry?
[01:04:55] Edward Lam: I think just about what I do, I think just that I cared and that-
[01:04:59] Stacy Havener: Mm-hmm ...
[01:04:59] Edward Lam: you know, [01:05:00] and I tried to do it right, or at least, you know, as far as I could do it. Um, yeah, that I cared and did my best.
[01:05:09] That's it.
[01:05:09] Stacy Havener: I feel like your caring is very evident. I also think your original, your original thinking is very evident. The way you're choosing authenticity to show up is really inspiring. It takes a lot of courage. Thank you. It takes a lot of courage to be authentic in any form. But I think to add in the layer of trying to find a place where you can invest authentically is, it's admirable, and that takes bravery.
[01:05:37] I, I think
[01:05:38] Edward Lam: that the most difficult thing, well, one, uh, actually it's not the most difficult. Well, but it's the interesting thing and, and I- it's a fine balance, I think, where, and I've experienced this a lot over time, forming these different opinions and often having the original research or having an original perspective is, is often quite contentious.
[01:05:57] Stacy Havener: Mm-hmm. Yes.
[01:05:58] Edward Lam: And, and also, [01:06:00] and this is the other thing about alpha, if you're really doing it, and this is where it gets awkward, is, is that you're effectively saying someone's doing it wrong.
[01:06:07] Stacy Havener: Yeah.
[01:06:08] Edward Lam: Um, and that's always unfortunately implicit in a lot of what you do. But I think that that's the other difficult thing is that, at least from my perspective, it, you know, it needs to be done with humility and also because I'm, I'm, I'm certainly not always right.
[01:06:22] Mm-hmm. I get a lot of things wrong. But at the same time, and th- this is, but this is the tricky thing is, is that you do actually have to do that. So- There've been times when I've essentially been discouraged from saying things like what I think.
[01:06:37] Stacy Havener: Mm.
[01:06:37] Edward Lam: Because people have, you know, some, some of my letters, which you may or may not have read or, or, um...
[01:06:43] But all I'm trying to do is work out what is true-
[01:06:47] Stacy Havener: Mm ...
[01:06:48] Edward Lam: and, and test it. Um, and it's not a personal thing if I think someone's wrong, you know? That's, that's their perspective- Yeah ... and they might be right.
[01:06:58] Stacy Havener: That, right.
[01:06:59] Edward Lam: But [01:07:00] unfortunately, the only way to generate alpha is, is, is effectively, I hate to say it, but you, you end up proving that someone else has got it wrong.
[01:07:09] Stacy Havener: Y- you know, it's, it's true, and even though you're saying like it, it j- it's not personal, it's very difficult for the person receiving that to not take it personal. Yeah. Plus, they're wrong.
[01:07:25] Edward Lam: Yeah. But plus, and actually I think this is why the hedge fund industry in particular attracts a certain kind of person.
[01:07:30] Stacy Havener: Yeah.
[01:07:31] Edward Lam: Who I, who I think is, is slightly different from me, you know? Who, who are very happy... I ha- you know, to bring up a name that everyone probably knows is, you know, a Bill Ackman-type-
[01:07:40] Stacy Havener: Yeah ...
[01:07:41] Edward Lam: person who's very happy to upset everyone, as long as he thinks he's right, right? Right. So, but that, but that, so but the structurally, that's what the, the industry incentivizes because, because frankly, that is pure alpha.
[01:07:57] Stacy Havener: Right. And, and [01:08:00] have you ever read the article about, um, the cycling thing, I think it was in Vogue, about Bill Ackman riding bicycles with Dan Loeb and some other hedge fund- No, I didn't. Oh my God. But I
[01:08:14] Edward Lam: can imagine.
[01:08:15] Stacy Havener: But it's in Vanity Fair. But I can absolutely imagine. It's in Vanity Fair. I'll, I'll, I'll look, I'll look it up.
[01:08:18] Oh my gosh. Yeah. It-
[01:08:19] Edward Lam: It sounds
[01:08:19] Stacy Havener: great. It like, it's one of my... It's old, but it's one of my- Yeah ... favorite like get the popcorn stories because, because the reality i- it's a very cutthroat business, obviously. Mm. But I think the, the way that I sort of process that, because of course a trade has two sides, and one side's gonna win and the other side is not.
[01:08:40] Yeah. That's, that's the nature of a trade. Um- But I
[01:08:43] Edward Lam: suppose, I suppose what I'm saying is, is that I'd like to be able to do it with a bit of civility.
[01:08:47] Stacy Havener: So that's, so what I was gonna... That's what I was gonna say, is that actually if you, if you put the elbows back down on the table as opposed to like doing this- Yeah
[01:08:57] um, really what [01:09:00] it is is because where people take offense to it is that it's the right/wrong, it's the, it's the this is good and the, the you're bad, and I won and you lost. Mm. It's that zero sum nature. But, and it's true, and this is sort of, I guess this is spin, but it really is that like there are a lot of ways to generate return.
[01:09:24] Yeah. Lots of ways. Yeah. Pick an, a return target and there are- thousands of different ways you could get to that number, and all of those ways are right if your goal is to get to that number, and what they really are is different.
[01:09:41] Edward Lam: Yeah.
[01:09:42] Stacy Havener: They're not wrong, they're just different, and different is good. And,
[01:09:48] Edward Lam: and everyone wants a different outcome.
[01:09:49] Stacy Havener: That's right.
[01:09:50] Edward Lam: One, one of my, one of my f- favorite things is, um, I'm sorry this is extending a bit, uh, the- Oh, it's fine ... I, I occasionally do this sort of, um- Yeah ... careers talk or, or things to, to [01:10:00] graduates and, and one of the... Well, and I've done it to others, others as well, but one of the charts I put up is, is just these sort of fake return lines, um, of all different kinds of shapes.
[01:10:09] Stacy Havener: Mm.
[01:10:10] Edward Lam: And with different outcomes. Uh, you know, some more volatile, some higher return, some lower return, some with a, a large upfront drawdown and, you know. A- and the interesting thing is that you always get a variety of responses as to what, you know, in anyone's opinion is the best return profile. Mm-hmm.
[01:10:29] Because at the end of the day, different people want different things from- Right ... from the market anyway.
[01:10:35] Stacy Havener: That's right.
[01:10:36] Edward Lam: And there isn't a right answer, in
[01:10:37] Stacy Havener: a sense. That's right. And so there's room for all of it.
[01:10:40] Edward Lam: Yeah.
[01:10:41] Stacy Havener: And what's great about that is it does take some of the elbow throwing-
[01:10:46] Edward Lam: Yeah ...
[01:10:46] Stacy Havener: out of it because- Yeah
[01:10:48] it's like, look, your way is fine. It's not my way. It's your way, and there are investors that like your way. And that's cool too- Yeah ... 'cause those investors probably won't like my way, and I'm just trying to find the investors that [01:11:00] like my way.
[01:11:01] Edward Lam: That's exactly it.
[01:11:02] Stacy Havener: Yeah. I have loved this conversation. If people wanna follow along on the journey, how do they do that?
[01:11:10] What's the best way to follow you and-
[01:11:12] Edward Lam: Um, I'm on LinkedIn. Um, yeah, I just-
[01:11:15] Stacy Havener: Do you have letters? I mean, I read your stuff on LinkedIn. Is there, is there another way, or
[01:11:19] Edward Lam: is this- I do. I'll put, I'll put you on the distribution
[01:11:21] Stacy Havener: list. Yeah, that'd be great.
[01:11:21] Edward Lam: Um, and I do have a distribution list of people who are interested, and they can, again, yeah, uh, DM me on, on LinkedIn or whatever and yeah.
[01:11:30] Stacy Havener: Awesome. Thank you so much for being here.
[01:11:33] Edward Lam: Pleasure. Absolute pleasure. Thank you.
[01:11:36] Stacy Havener: This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The information is not an offer, solicitation, or recommendation of any of the funds, services, or products, or to adopt any investment strategy.
[01:11:51] Investment values may fluctuate, and past performance is not a guide to future performance. All opinions expressed by guests on the show are solely their own opinion and do [01:12:00] not necessarily reflect those at their firm. Managers' appearance on the show does not constitute an endorsement by Stacy Havener or Havener Capital Partners.
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