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.
Institutional sales market heats up
(Pictured: Martin Scott)
A leading indicator of expected investment mandate activity – fund management sales recruitment – has picked up considerably. Here are several key hires to be announced in coming weeks, including the opening of a UK hedge fund firm’s office in Australia.
> Winton Capital, a UK-based hedge fund manager, which has been represented in Australia for one of its funds by Macquarie Fund Management, has recruited Andrew Grimes from Platinum Asset Management as its inaugural country head.
> Eben Bowditch, an institutional business development manager at BT Investment Management, will join his former colleague Martin Franc at Invesco.
> Stuart Haigh, a long-time MLC and NabInvest executive, has joined the expanding Partners Group with an expected focus on real estate and infrastructure.
> Evan Reedman is joining Vanguard from Credit Suisse. He will be in charge of consultant relationships.
The new moves follow some other previously announced activity, including the new head for JP Morgan Asset Management (Stephen Alcorn from Australian Unity) after a very long search, a new role in charge of fund management relations at asset servicing company Northern Trust (Peter Jordan from the UK) and another sales executive at Legg Mason (Colin Taylor, from JP Morgan’s asset servicing area).
One leading recruitment executive who specializes in financial services last week described the market for institutional sales people as “hot”.
The Winton Capital move is intriguing given that it raises the question of the ongoing relationship between the UK manager and the Australian bank. Macquarie’s deal, however, is only for the Winton Futures Fund. Grimes has come on board mainly to sell the Winton Global Equities Fund. Which competes directly with the Analytic Global Managed Volatility Fund.
Others have gone down this path before. Institutional sales is not Macquarie’s forte. Normally, offshore managers leave the bank’s wealth management arm to concentrate on retail.
At Partners Group, Martin Scott, the Australian business head, said the firm had doubled the size of its Sydney office to eight people in the past year and was hopeful of appointing another investment person soon.
He said Haigh would be spending his first six months acquainting himself with Partners Group in its London, Zurich and San Francisco offices. He will then be focusing on infrastructure and real estate for the multi-asset alternatives firm.
“People are searching for growth and yield,” Scott said. “There are lots of opportunities for us.”
He said this was also a long search, of about a year, because new recruits at partners Group can expect to get equity in the firm after about five years and they usually remain for the rest of their careers.
