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.
New owners at eSecLending
A former securities lending head at State Street, Craig Starble, has bought into and will become chief executive of eSecLending as part of a capital restructure of the firm following its purchase by private equity manager Parthenon Capital Partners.
eSecLending is the world’s largest independently owned securities lending agent, with a presence in major markets including Australia. It has ‘auctioned’ about US$3 trillion in assets since inception in 2000. It was previously backed by TA Associates.
As part of the restructure, Chris Jaynes, the current co-chief executive and a founding partner, will become president of the company. His co-chief, Karen O’Connor, plans to retire on completion of the arrangements.
Starble said the merits of a boutique independent service provider had become increasingly evident in the current market environment. Securities lending firms, mostly owned by banks or big index managers, have struggled in the low-turnover environment for mandate changes and investor wariness of short-selling since the global financial crisis.
Jaynes said the transaction would further strengthen the business while persevering its independence and maintaining continuity of senior management.
Starble left State Street in 2009 to set up Premier Global Securities Lending and attempted to recruit seven State Street staff some time later, ending up in court against his former employer. The seven moved on to other firms and Premier Global was not successful.
