Jana Sehnalova’s influence can be felt throughout La Française Forum Securities (LFFS). This is not unusual for a boutique investment manager whose CEO is Chief Investment Officer and a portfolio manager too. Responsible investing runs thick through the veins of LFFS’ investment philosophy and products, and Sehnalova is clear that doing responsible investing well requires an organisation that exists by the same values it seeks in its investments.
“Our team is very diverse, and this sets us apart from other investors,” according to Sehnalova. “We are ethnically and gender-diverse, but we are also diverse in our experience. Our team is small, yet we have six different nationalities, speak more than a dozen different languages and work in offices on three continents. We are a living example of diversity, and this differentiates us from many of the other players in this space.”
This philosophy does not stop with her own business. Sehnalova may well be CEO, but her beginnings as an analyst and her current role as a portfolio manager mean she is still hands-on. “I still interact with clients, and qualitative investment principles are still important to my roles. My responsibilities are complementary, and that hands-on aspect has never left me.”
As a result, she still has a deep insight into individual companies in the listed real estate sector and, in particular, how holistically they are adopting responsible practices. “There are three distinct groups. The first takes ESG (environmental, social and governance) seriously; for them, it is part of their DNA and they are leaders in the industry. The next group feels pressure from the industry and so they comply with disclosures, but this is not always enough. And then there is the last group, that has not yet realised sustainability matters.”
“Many businesses in the listed real estate sector are at an inflexion point now, and while there will be winners and losers, it’s clear to us that all companies must focus on ESG. There is no other way.”
Adversity (and bad luck) can fuel winning innovation
Product innovation has been as important to LFFS’ development as its focus on ESG, which Sehnalova discovered the hard way. In the late 2000s, when global real estate securities were at an early stage as an asset class, the team underwent a change of ownership that could have put it at a disadvantage to its peers.
At the time, many in the industry were simply concentrating on launching their first global products when the financial crisis put the industry through its most trying period. “I suspected there would be a huge amount of product development [following the financial crisis], particularly around volatility,” remembers Sehnalova. However, sweeping monetary easing programmes saw easy money flowing back into the sector, nullifying the need for volatility products and cutting short the industry’s initial flirtation with product development.
“At that time, we were going through a change of ownership. Everybody else was fundraising, but we were missing the boat. I knew then that we needed to innovate.” For Sehnalova, this was when assembling the right team truly paid off, quickly building one of the first volatility products available in the listed real estate sector.
Institutional investors have often felt more comfortable investing in direct real estate funds because they are traditionally more stable than inherently volatile listed property funds. So LFFS designed hedging mechanisms, incorporating public debt and equities into its listed funds to soften the double-digit volatility its products were experiencing and make them more attractive to institutional investors.
“Looking back over the last ten or 20 years, we have been trying to do more than just understand markets and IPOs. Building products that clients need, rather than forcing products on them, has been critical to our firm’s development.”
The hedging mechanism was a catalyst for further product development, which has seen LFFS become a leader in innovation and corporate values in the sector. The business has since designed ESG and Sharia products to address sources of new client demand.
An intelligent company approach
There is no hint of an iron fist about Sehnalova, whose approach is definitively team-first. Focused on cultivating a truly diverse environment, and allowing talent and ideas to flourish, she is committed to leveraging strong corporate values as a force for good for the entire listed real estate industry.
“This is not a hierarchical organisation,” Sehnalova explains. “The team prides itself in out-of-the-box thinking, and this organisation is a great place to demonstrate that. When we speak to clients, it is about explaining our unique investment philosophy. But we love to influence and contribute to the evolution of the industry, as a member of the Milken Institute Young Leaders Circle and industry events too. It is important to bring thought-provoking questions to a bigger audience.”