Lauren Mason speaks to Helen Steers, who was named primary manager of the £1.5bn Pantheon International investment trust (PIP) in February this year. She has been a partner at Pantheon since 2004 and has worked closely on PIP alongside former manager Andrew Lebus since 2015.
It has been an unprecedented time for economies across the globe and therefore markets. Has the coronavirus led to any repositioning of the portfolio?
Pantheon has a very long-term time horizon. The underlying instruments we invest in are very long term as well. But over the last few years, we have been shifting into areas that have incidentally been less negatively impacted by the crisis.
For example, the biggest sector in our portfolio is information technology, and recently businesses have been doing everything they can to enable remote working. We were already shifting our portfolio towards themes such as process automation.
That has proved to be a very good decision because that market area accounts for 24% of the portfolio's net asset value and it has proven to be very resilient. Our second largest weighting is in healthcare.
Healthcare stocks have proven very popular recently as the coronavirus pandemic rages on. Are you worried short termist investors could be artificially inflating asset prices?
There will be winners and losers in the healthcare area, but we think there will be more winners.
The reason we were shifting in that direction was because of the deep demographic trends across developed markets where you have ageing populations and subsequent health challenges.
We hold companies that do orthopedic implants, elderly care and biotechnology testing, for example.
There might be some short-term impacts on valuations but, long term, I think these areas are particularly interesting.
Which sectors have you been reducing the portfolio's exposure to in order to increase these weightings?
The consumer sectors - that's everything from discretionary to staples - was the single-biggest sector in the portfolio ten years ago, although this still remains a significant part of the fund.
The big shift has been from a more general and consumer-weighted portfolio to much more of a technology, growth-oriented portfolio.
You are able to invest in funds that hold businesses across varying stages of their lifespans, as well as funds that invest in either growth opportunities or special situations. Are there any businesses stages you prefer to invest at, and which style are you currently leaning towards?
Pantheon has had a bias towards the mid-market and growth for some time. Approximately 40% is held in mid-market investments and about 19% in growth - that is a vast majority of the portfolio.
Often our managers are buying family-owned companies or entrepreneur founder-owned companies that are looking for that first institutional shareholder to help introduce both capital and expertise to grow their businesses.
We think there are a lot of innovative and fundamental things private equity managers can do to help advance businesses in that stage of development - not necessarily the early stage, but not at the stage where they are very large buy-outs where there are fewer leavers to pull.