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.
Centric finds ownership solution
(Pictured: Spiro Paule)
Centric Wealth and Financial Index Wealth Accountants will merge, assuming last week’s announced proposed agreed takeover proceeds, to become one of Australia’s largest, and unaligned, advisory groups, speaking for $7.6 billion under advice. This may have implications for the institutional part of the industry too.
Financial Index’s (Findex) backer, private equity firm KKR, will take out Centric’s private equity backer, CHAMP, under the offer to all shareholders. CHAMP announced it was putting its majority share of Centric on the market last year.
Centric had been making inroads into the institutional space as part of its expansion last year under chief executive, Phil Kearns. He had appointed Andrew Merhtens, a fellow rugby international, to offer Centric’s managed account system to big super funds which are looking to introduce member directed investment options to their members.
Merhtens moved from New Zealand to Sydney with his young family last year for the role. It is not yet known who among the senior Centric team, including Kearns, will continue under the new ownership structure.
Spiro Paule, Findex founder and chief executive, said in a prepared statement that the transaction would bring together two businesses with a strong focus on providing the highest quality financial advice for clients.
“The combination of the two businesses creates one of Australia’s largest, non-aligned financial advisory organisations,” he said. “We are both focused on providing the best possible advice and solutions to our clients. We will be able to share respective areas of expertise and offer clients and employees a greater level of sophistication and opportunity.”
One of Centric’s comparative advantages among financial planner dealer groups has been its technology in the managed account space. The merger with Findex could allow the development of this aspect of the business, with big super funds as potential clients.
