“Win By Losing Less”: Jacques Bossuyt’s Unvarnished Perspective on Thirty Years of Fund Management

A key figure in the financial community, Jacques Bossuyt has left his mark on the industry through his rigorous management and independent spirit. A former fund-of-funds manager for Assurances Foyer, he led the Patrimonium Diamond fund to the top with a 5-star MorningStar rating over ten years.

Now Wealth Manager at Bellatrix Asset Management, he continues to enliven the financial debate through his "Politically Incorrect Financial Letter" and his "Meet The Managers Out Of The Box" format. In this exchange, he abandons the "langue de bois" to share with us the real lessons learned from past crises and his vision of the manager's profession.

We often speak of crises as ruptures - 2001, 2008, 2020. But in your experience, what has been the most formative period for you as a manager, and why is it perhaps not the one you'd expect?

For me, the turning point was 1998-1999. At the time, I was working for the Dutch Robeco Group. Robeco had - along with Rabo Bank - a prestigious economic research department. In 1998, these people had published a very voluminous report in which they predicted and argued that the internet bubble would burst. And - oh surprise - 1999 was the record year for the stock market. The stock market had gone completely mad. You only had to look at the charts, which were exploding vertically (a bit like today).

In Q3-1999, I was already starting to advise my clients to invest in cash, but nobody was taking my advice. In Q4-1999, I made my clients sign a disclaimer if they absolutely wanted to invest in equities. What happened in March 2000 showed me that I was right, and that you have to be consistent with what you believe. Hence the name of my strategy, The Consequent Investing Concept Portfolio, which consists of Winning By Losing Less.

On the other hand, I've also learned that, when it comes to careers and compensation, it's better to be wrong with everyone than right too soon! If my customers were losing money in 2000, it wasn't my fault, but the market's. If I'd missed the rise, it would have been my fault, and my boss would have kicked me out. In 2000, I was considered a star, because I'd lost ONLY 39%, while the market had lost 50. My boss was happy... Ridiculous, isn't it?

After that, there were other ruptures: 2008 and 2020, when we saw that central banks could - by manipulating the figures and printing monkey money - sweep all the problems under the carpet. This warns me: for the coming 2026-2027 crisis, central banks and governments no longer have the means to save us.

There comes a time in a manager's career when confidence turns to overconfidence. How did you recognize this shift in yourself - or in the managers you selected - and what can you do to guard against it?

In my career at Foyer, where I managed a fund of flexible funds that was awarded 5 Morning Star stars, I met hundreds of managers, some good, some bad, some boffins and many with inflated egos. Investing and selecting funds is a "peoples busines": it's the man (or woman) who counts, not the brand of the management company he or she works for. It's when you talk to them face-to-face that you realize whether they're exaggerating or not. And when the narrative becomes too enthusiastic, it's time to pull back.

Yes, you can be overconfident sometimes. I myself had it in 2020, the Covid. As I had survived the 2018 crisis very well (I had made +12% compared to -14% for the Stoxx50), I thought I would also sail well between Scylla and Charybdis in 2020. I didn't believe that this extremely serious and dangerous crisis would come to an end just because of the sudden announcement that a small firm in the depths of America - which nobody had heard of - had found the vaccine against Covid in 6 months (normally it takes at least 2 years). So I missed most of the rebound.

Prolonged bull markets create an illusion of competence. What does a multi-year bull market conceal about a manager's true quality - and how can we detect it before the correction reveals it the hard way?

The times we're living in today seem to vindicate the fanatical fundamentalists (the jihadists of finance) who say, no problem, with equities you always win, look at the Nikkei - we've waited 35 years - but we still win - just stay 100% invested, put your back into it and wait for the storm to pass.

No, gentlemen, investing is not about waiting for the storm to pass. Investing is learning to dance in the rain!

So, once the charts start to go haywire, and there's no logic left in the market, and especially when central banks and governments have run out of lifelines, it's time to start taking cover.

If you had to single out a single decision - a position taken or abandoned - that fundamentally changed the way you manage, what would it be, and what did you really learn from that moment?

What changed my management style was when I left the Robeco bank (which had since become Sarasin) and realized that - in the long term - you win by losing less.

In 2000, I asked myself why all the managers in the world (not all, but at least 90% of them) were wrong, even though they're all very intelligent and have all done the same great studies. But most are not consistent with what they think. This is what I call career risk: for the manager who wants a career and big bonuses, it's better that he's wrong like everyone else, rather than right too soon; he's not going to risk his career for the bank's customers!

I've always been consistent with what I think, so I've never received a big bonus. But I was awarded 5 Morning Star stars with the Foyer Patrimonium Diamond fund of funds. And today, at my advanced age, I still manage client accounts that were invested in the fund. You should know that, when Capital at Work came into the Foyer fold, they liquidated the fund at the height of its glory, because they didn't want third-party funds... At the time, I was the first and only flexible equity fund of funds manager in Luxembourg to receive 5 stars.

What would you say today to a young management professional who thinks that data and quantitative models can replace what it took you twenty years to build?

Every year, I give a lecture to final-year Wealth Management students at Paris-Dauphine University. At the end, I tell them:

Know that not everything you were taught at university is gospel. Question yourself regularly, and stay humble. If you join a bank, study your boss's personality. If he has a big ego, don't make too much of it at first, but learn from him (provided he's smart).

If you want to make money, forge a very personal bond with your customers, because in our business, chat is more important than skill. The day you have a nice portfolio, you can leave the bank for a management company that will pay you out of your AUM, and you can delegate the management of your portfolios to an old hand like me.