Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Mercer adds some fire power to Aussie funds
(Pictured: Russell Clarke)
Mercer has strengthened its funds management team ahead of the return to Australia of the London-based global CIO Russell Clarke. Nick White, a senior investment consultant, will take on the role of head of policy for the funds and Dave Stuart, the head of dynamic asset allocation, will take on the role of chief strategist.
Clarke will be visiting Australia prior to his permanent return in December, as Asia Pacific CIO, based in his home town of Melbourne, after a two-year stint in London. Mercer’s Australian investment trusts are a central piece in the firm’s global funds management arm, with about A$23 billion in assets. They also have the longest track record of the company’s funds around the world, having been established in the early 1990s.
In his latest quarterly update to clients early this month, Clarke said White had been advising consulting clients on policy and strategic positioning and his role for the funds would be similar. Stuart would also be having a more active role with the funds, which had benefitted from the dynamic asset allocation tilts over the past year, Clarke said.
Before joining Mercer in 2006, Stuart was the regional CIO for HSBC Asset Management.
The Mercer funds have had a relatively low currency hedge in place this year, as the Australian dollar fell, as well as an underweight to bonds in an environment where that asset class has not performed well.
Clarke said the most recent few months had been unusual for markets because good economic news, particularly out of the US, had been “rewarded” with corrections due to the awareness of the US Government’s quantitative easing policy coming off as the economy improves. Nevertheless, the equity markets had delivered their best return for six years.
