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.
Lill gets CIO role as Morningstar investments go global
(Pictured: Andrew Lill)
Morningstar is looking to better integrate its investment management group, Ibbotson Associates, in the Asia Pacific region and globally, with the appointment last month of Andrew Lill, the respected former asset consultant, as CIO for Asia Pacific.
This will allow Daniel Needham, who was promoted in May last year to global Morningstar CIO, and now based in London, to look at providing a worldwide uniformity of philosophy and structure for the investment part of the company. Needham was the Australian CIO and co-managing director based in Sydney, after Morningstar acquired InTech Investments from IOOF several years ago. He had been commuting between London and Sydney extensively since mid-last year. The other managing director, who now has sole responsibility for the Australian business, is Chris Galloway.
Lill, who made his name as director of investment strategy for the region at Russell Investments, had been at AMP Capital in the multi-asset group for the past four years. He said that the Ibbotson opportunity was very attractive, given the strong existing team and brand, as the company was looking to build its presence throughout Asia.
And, he also had a personal relationship with Needham going back some years, confirming shared investment beliefs.
Ibbotson has more than $4 billion in funds under management in Australia, mostly acquired through the former InTech business. The global business has over US$100 billion under advice and more than $50 billion under management, mostly in the US. Ibbotson has been transitioning the management of these assets from a traditional multi-manager structure to a more contemporary one, which involves fundamental beta strategies, inhouse management and outsourced high-alpha specialists.
Of the $4 billion, roughly $1 billion is in outsourced Australian and international equities, $500 million in alternatives and the rest in a mix of ETFs, fundamental beta strategies and internal management. The Sydney-based investment team has 12 professionals.
Lill said that, as a manager and advisor, Ibbotson strongly believed in dynamic asset allocation and the customization of multi-asset investment solutions which were based on risk-adjusted outcomes rather than traditional benchmark tracking.
He said he was impressed with the speed with which Morningstar had developed the range of capabilities to construct outcome-orientated investment strategies for clients.
While Sydney is the current Asia Pacific hub for the company. Lill said the aim was to establish a separate centre for investments in Asia. Morningstar currently has offices in Hong Kong, Singapore, Mumbai and Shenzhen.
