If it’s true that scale is increasingly important in fund selection, Raphaël Sobotka has reasons to feel confident about the future. The HSBC fund selector tells Citywire how he directs his buying power – and why the human factor is so important.

New ideas can get out-of-date date very quickly. Raphaël Sobotka has just finished reading a book called Critical Mass, in which author Philip Ball outlines his theory of ‘social physics’.

Put simply, the book’s argument is that society has developed to a point where humans behave in a similar way to the interaction of particles observed by physicists. It’s an interesting twist on the ideas behind the theory of behavioural finance – a subject that Sobotka finds particularly interesting.

Although Ball’s theories are still highly thought-provoking, they appear in a very different light after the global economic crisis that has engulfed us since the book was written. It’s a good illustration of one of Sobotka’s key beliefs about fund selection – the importance of timing. Picking up on a new idea or trend is only profitable if you do so before everyone else does.

However that does not mean that Sobotka, who is CIO for EMEA at HSBC Multimanager, is trying to time the market in the broader sense. It is more a case of gaining a deeper understanding of the environment a fund manager operates in, to give himself maximum possible exposure to that manager’s potential for outperformance.

‘We try to find the right balance between local knowledge and timeliness of decision-making,’ Sobotka says. ‘It’s key to be close to the manager that you research, but also key to be close to the market you research. You cannot isolate the manager from the market he operates in.’

Fund managers who describe themselves as bottom-up stockpickers are often keen to stress that macro views are not part of their process. Sobotka believes this is rarely entirely true. ‘Even bottom-up stockpickers have to make an assumption about the stocks they select. It’s very rare you can make these assumptions without some sort of macro view.

‘One source of alpha inefficiency is the investment habitat – certain market habitats that the manager will like to play. If we are trying to select high alpha managers, we are forced to first have a view of the opportunity set – at least to avoid hiring managers too late in the alpha cycle.’