By Mike Clements, Fund Manager, VT Downing European Unconstrained Income Fund
Not long ago, I had an insightful conversation with Chris Marshall, behavioural scientist and founder of the Playfulness Institute, on his Being Playful Podcast. The conversation got me reflecting on the role that curiosity and creativity play in what I do—especially when the markets are volatile and the future’s unclear. A playful mindset, as Chris puts it, is more than just a way to stay resilient; it’s a means to uncover opportunities others miss. And for me, as a fund manager navigating Europe’s complex markets, this approach has been invaluable.
The value of embracing uncertainty
Starting out as an investor during the dot-com bubble, I quickly learned that markets are rarely predictable. Theoretical models often assume rational behaviour, but real-life markets are a different story—they’re influenced heavily by emotion, fear, and a herd mentality that can drown out fundamentals. Early on, I understood that my role wasn’t just about calculating numbers but about navigating uncertainty, which has only grown more relevant over my 25-year career.
My approach is rooted in a contrarian mindset. Rather than following the crowd, I try to find value in areas that others overlook. This requires an ability to step back from the market’s emotional reactions and engage my curiosity and creativity to think beyond the obvious. Curiosity, the drive to keep asking questions, has proven invaluable in times like these. It’s what allows me to dig into details, ask “why,” and approach investments from different angles.
Curiosity and creativity: Essential tools for a contrarian investor
Curiosity isn’t just a nice-to-have; it’s a critical lens through which I view potential investments. At Downing Fund Managers, I have the freedom to explore diverse industries, jumping from housing markets in Ireland to advancements in renewable energy in mainland Europe. By connecting these seemingly disparate dots, I can uncover opportunities that wouldn’t be visible through a narrower focus. This multi-disciplinary approach allows me to view potential investments with a unique perspective, often leading to hidden gems others might miss.
Creativity, too, plays a central role in my process. In the face of bad news or market drops, it’s all too easy to fall into the trap of short-term thinking. But a creative approach enables me to look past the immediate noise, envisioning different scenarios and asking, “What does this look like in three to five years?” It’s this flexibility—reimagining where a company could go—that often highlights investments with strong long-term potential, even if the present looks uncertain.
Recognising the role of emotional awareness in markets
Emotion has a habit of slipping into the cracks of rational decision-making, especially in volatile markets. Knee-jerk reactions can lead to poor choices, like panic-selling on bad news or jumping into hype during a bull run. Recognising these biases, both in the market and within myself, keeps me grounded. I don’t believe in suppressing emotions, but rather, in acknowledging them and using structured decision-making processes to balance reactions with data.
With the VT Downing European Unconstrained Income Fund, we’ve built these processes into our approach. When new information hits, rather than reacting impulsively, we go through a series of steps designed to assess it calmly. This method ensures we make decisions based on thoughtful analysis, not on market noise or temporary sentiment shifts. In a world where staying level-headed can be the difference between success and failure, having these steps in place is invaluable.
Why playfulness matters in investment culture
Downing Fund Managers provides an environment that nurtures this blend of curiosity, creativity, and discipline. I’ve worked in places where creativity was constrained by rigid risk frameworks, where the freedom to pursue unconventional ideas was limited. But at Downing, I have the autonomy to explore new ideas and take calculated risks—an environment that values flexibility and open-mindedness is essential for uncovering off-the-radar investment opportunities.
Playfulness here isn’t about being whimsical; it’s about adaptability. It’s the freedom to look at problems from fresh angles, to question assumptions, and to pursue insights that might seem unconventional but could deliver value. Downing’s culture supports this mindset, enabling me to push boundaries and think differently—an essential aspect of a contrarian approach to investing.
A contrarian in a volatile world
Being contrarian isn’t just about taking an opposing stance; it’s about knowing when market sentiment diverges from reality. Stocks often fall out of favour not because fundamentals have changed, but because sentiment has. This dislocation creates opportunities, and the ability to recognise these moments is rooted in independent thinking and the courage to act differently.
In a world where markets and investor sentiment are constantly evolving, staying adaptable and curious is non-negotiable. My journey has shown me that a mindset open to uncertainty, paired with the freedom to explore, is the foundation of a successful investing strategy. At Downing, this approach thrives, allowing us to transform market ambiguity into opportunities for growth.
For those interested in learning more about our approach at Downing Fund Managers, I welcome you to reach out. Embracing uncertainty isn’t about accepting chaos; it’s about recognising the opportunities that can arise when you’re willing to look beyond the noise.
Notes
The Being Playful Podcast, hosted by Chris Marshall—a behavioural scientist, futurist, and founder of the Playfulness Institute—explores how embracing the concept of playfulness can address modern workplace challenges. Aimed at CEOs, team leaders, and aspiring managers, the podcast delves into strategies for fostering innovation, building resilient teams, and enhancing personal well-being. Through conversations with diverse guests, Chris examines the roles of curiosity, creativity, and connectedness in achieving high performance and adaptability in today's dynamic business environment.
Risk warnings: Please note that past performance is not a reliable indicator of future results. Capital is at risk. Investments and the income derived from them can fall as well as rise and investors may not get back the full amount invested. Investments in our funds should be held for the long-term and are higher risk compared to investments solely in larger, more established companies. Opinions expressed represent the views of the fund manager at the time of publication, are subject to change, and should not be interpreted as investment advice.
Important notice: This content is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing LLP as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. Downing does not offer investment or tax advice or make recommendations regarding investments. Downing is a trading name of Downing LLP. Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 545025). Registered in England and Wales (No. OC341575). Registered Office: 10 Lower Thames Street, London EC3R 6AF.
