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Questions for investors in global growth managers
(Pictured: John Schaffer)
The results of broad bodies of research, of which all institutional investors are well aware, do not necessarily apply when we narrow the universe to practically available options. A research note by the Australian representative of an international growth manager, for instance, poses some interesting questions for investors.
John Schaffer, whose Catallyst Advisors represents US global growth manager Johnston Asset Management, has studied the relative performance of growth-orientated managers which are represented in Australia compared with the total global growth, total global value and the main indices over the past eight years, which could be regarded as a full cycle.
While the research note is designed as a marketing tool, it suggests that managers which are represented in Australia may outperform the total universe of global managers. It also suggests value managers do not necessarily outperform this tight cohort of growth managers over a cycle.
Schaffer, a co-founder of the former InTech Asset Consulting firm (now a part of Morningstar), said it was difficult to come to too many firm conclusions based on the work, “except that this group did pretty well over the recent cycle”.
He said: “They [the Australian-represented global growth managers] have just about all comfortably beaten the index. As a group, they are about 2 per cent above the average.”
He admits that there may be some self-selection in the winning cohort, in that a global manager is unlikely to set up a representative office in Australia without good performance to give it an equally good chance of success in raising money.
“They won’t bother to spend the money and effort to come here unless they believe they can deliver,” he says.
The performance numbers and style categories are based on the eVestment global database. Catallyst defined and selected the Australia-represented group for the study.
The numbers show that over the longer term the growth managers doing business in Australia generally outperformed other growth managers as well as the whole universe of eVestment-listed global equities managers over the past seven years.
Schaffer says that several of the top-performing managers have built up significant Australian-sourced assets under management. Johnston was awarded its first Australian mandate, by Perpetual Investments, in 2006.
“But some are either at or near full capacity and at some stage investors are going to have to look at new managers,” he says.
