Some members are excited for retirement, while others approach it with a “real sense of shame and fear”. Funds are going to have to figure out how to cater to both groups or risk failing them all.
If there’s one lesson for investors from the past five years, it’s that chopping and changing their strategy – even in the face of massive market turmoil – doesn’t always pay.
Omega shakes off ‘bonds-only’ image with new fund
Omega Global Investors has broken out of the image of being a fixed-income only house through the launch this month of an ‘equity income’ fund, run by new recruit John Moore. The move coincides with the opening of a Sydney office.
Omega is a Melbourne based boutique which started out in 2008 in indexed and enhanced index fixed income. It now has nearly half of its $3.5 billion in funds under management in equities, with the new fund widening its appeal.
The firm has ridden the wave of investor demand for outcome-oriented investment strategies. Its slogan is: “Begin with the end in mind”. The word ‘omega’ is the last word in the Greek alphabet.
Mathew McCrum, one of the three founders of the firm, says that risk control is very important for any strategy designed to achieve a target outcome. For Omega, this involves picking factor that the managers think are best for the investor’s time horizon and then putting a risk-control structure around that.
“Risk is the starting point, rather than return,” he says. “We think that’s an intelligent design for a portfolio.”
And risk is not just about tracking error, he says. It can also be ‘draw down’ (which are absolute losses), what the information ratios of the portfolios look like and the probability of a negative return.
“Also, the tax side of things is important. You don’t want a negative event plus a tax bill, which is what happened in 2008 for many investors. They are things you can manage for, as we do,” he says.
One of the firm’s other founders, George Vassos, who also acted as managing director for the business, died at the age of 47 late last year after a battle with cancer. He was an industry identity who spent about nine years at Vanguard before starting Omega. He was married with three daughters.
Andrew Gruskin, director of investments, is Omega’s third founder. The firm has 13 staff.
Despite the loss, and in a business sense at least, Omega has continued its growth with the recruitment of John Moore and the launch of the equity income fund.
McCrum says the fund has a target return of about 5-6 per cent with about half the beta of the equity market. This is particularly good for clients who don’t pay tax, such as charities, who don’t want to see their income eroded nor have the full market’s beta volatility.
