Fund management and financial services give physicist Ben Peters an insight into a highly uncertain world.
After completing a PhD at the University of Oxford, exploring single molecule transistors, Ben Peters moved into financial services. Here he describes his transition from academia.
Click here to read about how Peters pursued fund management as a career.
Why did you decide to leave academia?
Job security is a big thing for a postdoctoral researcher. Having to reapply for funding every few years didn’t much appeal to me at the time, particularly as I’d just had a child.
But as it happened, I had become interested in the world of investment and investment management through my brother in law, Hugh, who I now in fact work with. So I had an ‘in’ to the industry, and I had an idea of where I wanted to look.
What are some of the biggest lessons you’ve learned since starting out in fund management?
In theoretical physics you derive an equation and you get a result. With experimental physics you do an experiment and within the boundaries of error, you get a result. You don’t really get one in this field in terms of finishing a project or getting a precise answer.
In fund management, you do a piece of analysis on a company, you look at how the company works and invest in it. Then, the job isn’t done because you still need to monitor the company and look at what it’s doing: Is it doing what you thought it would? The continual analysis is completely open-ended. My job will never be done as the work is not project based.
The other thing is that you’re always operating in the environment of a highly uncertain world. The whole system of companies and economies that I look at is fantastically complex. This is an extremely interesting and unanswerable question: how do those things interact? Are there any analytical tools that I can take to it?
Can you give an example to demonstrate this uncertainty?
As a fund manager I pick stocks. To be one of the greatest fund managers that ever lived, you need to have a hit rate of about 60%. This means that your winners need to be 60% of the companies that you chose. This means that you’re only marginally better than 50-50. So the investments need to be much more statistical, and more about tilting the odds in your favour. You’re not going to nail every decision you make. That’s an interesting and difficult thing to get used to.
Are there a lot of scientists working as fund managers?
In fund management there are a whole mix of disciplines; anything from maths and physics to history and languages. But scientists tend to go into the more quantitative branches like high-frequency trading.
Why did you decide to work in fund management, rather than high-frequency trading?
When you’re doing these high-frequency trades you’re actually looking at how stock prices fluctuate, which isn’t a good indicator of how the world works. Fund management is long-only equity investing, where there is a mixture of quantitative and qualitative analyses. I can use this combination to find out companies get established and make money. How does the fabric of those make up an economy?
If you’re up for a massive intellectual challenge that will continue to surprise and interest you, then look seriously at this field. The inquisitive mind that tends to go into science would find a lot to like here.
Interview by Julie Gould