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.
‘Patience key’ as Frontier restructures, brings out the young guns
The two service areas of investment governance and responsible investment will join the sector research program under the direction of Paul Newfield, with principal consultant Andrew Kemp taking on the new role of deputy director of research while heading up Frontier’s private markets efforts. The other research teams reporting to Newfield will be real assets, equities, defensives and alternatives, and private markets.
“There’s no doubt that both responsible investment and enhanced governance in investing are key areas of focus for asset owners,” said Frontier CEO Andrew Polson. “We think bringing our dedicated teams already working with clients in these areas directly into our research program will deliver further synergies and further integrate those insights and practices.”
The restructure is part of Frontier’s new five-year plan, which will “reposition the business to solidify existing business and seek emerging and transformative growth” by developing new services and new markets in New Zealand and the Pacific, as well as Japan and South Korea, and through “strategic partnerships” with wealth managers and smaller institutions.
Manish Rastogi, James Gunn and Joey Alcock will remain as head of real assets, equities and responsible investment respectively, while Iain McMahon and Sarah Cornelius will move into new roles as head of defensives and alternatives, and head of investment governance. Marie Cardaci has also been promoted to deputy head of responsible investment.
But while alternatives had previously been a standalone research team, it’s now been brought into the broader defensives and alternatives group; the former head of alternatives, Michiel Swaak, will leave Frontier.
“We’re going to merge our teams researching in the alternatives and broader defensive classes to get a better holistic result with a bigger single team looking at a complete range of aligned investment ideas outside of the more traditional equities and real assets areas,” Polson said.
Frontier has seen quite a bit of success with its six-month internship program, which sees students completing PhDs in finance while working in Frontier’s investment strategy team. Building on that, it will be introducing an “entry level” pool of investment and data analysts to support its teams and take on some of the less intensive work of its associate level staff in a move that will help “facilitate the introduction of new talent to Frontier, and provide a clearer career path for (its) junior staff”.
“Many of our leaders in the business have grown from entry level roles with Frontier, and that’s been a hallmark of our business for almost three decades now,” Polson said.
“We’re a people business. The quality of our team and the integrity of our unconflicted advice model is what our clients really value. So, we have to be very selective in finding the right people to join our team. That includes cultural fit as well as intellectual capability and work ethic. We have a strong record of finding and developing talent and I’m looking forward to that process. It’s exciting.”
