Meet a successful mother-daughter mutual fund team

Candace and Amelia Weir, a mother-daughter team of mutual fund managers, are outliers.

Of the roughly 10,000 funds available to U.S. investors, only 179 were managed by all-female investment teams at the end of 2020, according to Morningstar. This represents less than 2% of teams and less than 1% of investor assets.

In contrast, 70% of funds and 60% of investor dollars are managed by all-male teams. And while Morningstar didn’t track that data, it’s a safe bet that at least some of those teams include fathers and sons. After all, how many financial firms include “& fils” in their name?

Considering the overall numbers, it’s just as safe to bet the Weirs are the only mother-daughter team in the business. That hasn’t stopped them and their team in Albany, New York, Paradigm Capital Management, from achieving great results.

Over the past decade, Paradigm Micro-Cap, one of three mutual funds they manage that invests in small company stocks, has generated a 13% annualized return. That’s better than 97% of US small business mutual funds.

Below, the Weirs share the secret to working successfully as a family and offer advice for women hoping to break into a male-dominated field.

The interview has been edited for clarity and conciseness.

“We have always trusted each other in a fundamental way”

Ryan Ermey, Senior Reporter: Candace created Paradigm from another company she founded in 1994. How did you come to work together?

Candace King Weir, Chief Investment Officer of Paradigm: Amelia was out of business school and worked at Paine Webber and two other hedge funds. I had a very good co-portfolio manager, who in 2007 decided to leave and start his own business. I kinda felt like, “Whoa, that’s a lot for one person.”

I forget when Amelia and I first started talking about it, and I had great reservations about family and business. But we talked about it several times, and finally we agreed that as long as it didn’t come between us as mother and daughter, we had a chance. Now, 14 years later, and I’d say it’s gone really well.

I think the real essence of it all is that we always trusted each other in a very fundamental way. I know she always has my back.

Ermey: Is there a secret behind the success of working as a family?

Candy: I think you really have to have a real sense of, a, “Do I really want to be in this company, regardless of who owns it?” And, two, “What is the solid ground of my relationship?”

I think you must have a very firm sense of, I trust this person. You must go through one of these filters. Because once you’ve committed, especially to a family, it’s not like, “Hey, come to my office, I want to tell you why it’s not working.”

Amelia Weir, Senior Vice President of Paradigm: Part is, do you want to get the business regardless of ownership? Do you think the company has a good process? Do you think the company has a good team?

And then the other part is that you really have to be upfront and honest about your own and the other’s thought process because you’re not suddenly going to teach someone to think like you, right?

“Talking is a muscle. It’s something you have to keep doing and practicing’

Ermey: Your placement results speak for themselves. Do you think being women in a male-dominated industry has helped you as investors?

Candy: I would say to a certain extent, yes, for two reasons. First, last week I had three or four calls with CFOs and each of them was a woman. I think we all evolve, and when it comes to these young female CFOs, I think they love reaching out and they love talking with another woman.

Second, we constantly have leadership teams in the office, and I think they like the dynamic. And when they get here, they see that we both understand the game, we’re both quite brilliant. And we’re going to ask tough questions, but we’re going to do it nicely. It’s an art form, I promise.

Amelia: We are very polite. And I mean, you can be polite regardless of your gender. But I think our style, we’re kind of soft to the touch. We don’t get angry, we don’t yell at people. And I can imagine being in other companies where there’s a fair amount of ego, where people actually think it’s okay not to be particularly nice to people.

Maybe you missed the shift, and maybe it was in your control, maybe it wasn’t. Maybe it’s good for someone to yell at the CFO. But we know we don’t do that.

Ermey: What would be your biggest advice for women looking to break into this field?

Candy: Maybe one thing I would say is that you are better off in a small store where you can prove what your talents are, your ability to work long and hard. But I don’t think there is any secret formula to this. If you have a dream, stick to it. Because I really think that generally you can do it.

Amelia: I’ve been going to conferences for 20 years, and sometimes I look around and count the male to female ratio. Depending on the sector, this could be 90-10 or 75-25, but usually somewhere in the middle. You go to breakout sessions, and a guy will have no qualms about asking the most basic question. I would die if I raised my hand and asked that question.

So I think part of it is about not underestimating yourself, because half the time the question you have in your head is probably three times as thoughtful as the people raising their hands.

Talking is a muscle. It’s something you need to keep doing and practicing.

“Having a long-term horizon gives you that confidence and conviction to stay the course”

Ermey: Your fund has an excellent long-term balance sheet, but small company stocks have been crushed so far in 2022 in a volatile stock market. How do you handle things when stocks are down?

Amelia: Candace has been here longer than I have, but when I think back to the past two decades, when you think of ’08-’09, you think of the spring of 2020, we had some very precipitous downturns.

For us, it’s reassuring in the moment, but also kind of proven in the longer term, that the process that stays consistent is really key, I think, to sustaining that long-term outperformance. And you can’t always promise or deliver it from quarter to quarter or calendar year to calendar year. But what we’re seeing is longer term, really knowing your names, doing your bottom-up research, going back to our own internal process really adds a lot of value in terms of believing your names in these real dislocation slowdowns.

But also, then you participate in rebounds when they inevitably happen, because you can’t time them and you can’t predict them. Having a long-term horizon gives you the confidence and conviction to stay the course.

Ermey: What do you look for when considering adding a new business to your portfolio?

Amelia: We look for valuation mismatches, underwatched, undervalued names and very strong free cash flow profiles. Because what I really saw from 08 to 09 2020, and until today, and before that as well, is that these companies have the ability to control their own destiny.

Ermey: Your process involves having in-depth discussions with company executives that individual investors cannot. But what are the types of things that retail investors might look for when evaluating a security?

Amelia: One thing is worth considering: is there a stable dividend? Are there other elements, such as high free cash flow, that provide support or stability to the business? Because by default, if a company has a regular dividend or a constant dividend, it has confidence in its own balance sheet and cash flow profile.

Candy: If you’re truly a novice investor, for lack of a better term, it’s good to start with companies that have a track record – that have been in business for over a decade – so you can say, well, they have succeeded in this. This is not someone who did a SPAC or an IPO three months ago. Who knows where they will all end up?

Initially, I would go with a company that has a proven track record.

The opinions expressed are general and may not be suitable for all investors. The information in this article should not be construed as, and may not be used in connection with, an offer to sell or the solicitation of an offer to buy or hold any interest in any security or product. ‘investment. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance and fees before making any investment decision. No amount of diversification or asset allocation can assure profits or guarantee against losses.

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Dolores W. Simon