Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Winton retains Macquarie as it expands in Australia
(Pictured: Andy Grimes)
Winton Capital, the UK-based global manager which has recently set up in Australia, will have an ongoing relationship with Macquarie, which has represented it for several years. Winton is one of the few managers to offer clients a performance-only fee arrangement.
Andy Grimes, who heads the new office, said the manager has about $1 billion of its $25 billion in total funds under management sourced from Australia. It’s a two person Sydney office – himself and Pru Kirk, who had previously worked at Agora Asset Management and Alpha Investment Management. Grimes was hired from Platinum Asset Management.
Winton is a research-heavy quant manager, so the performance-only fee offer is particularly interesting. It has about 300 staff, of whom 140 are “scientific researchers” with PhDs and Masters degrees (i.e. expensive).
Grimes said he was intrigued by the proposal a few years ago from Fiona Trafford-Walker, head of investment consulting at Frontier Advisors, that managers should look to offer a flat fee to cover their fixed costs and a performance fee based on alpha generation. The proposal hasn’t gained wide acceptance.
“Well, we’re prepared to waive the fixed costs component too,” Grimes said.
Interestingly, among Macquarie’s many products built over many years are some which also have performance-fees-only attached. Like other managers owned by investment banks, it has sometimes also offered “no-fee” products, where it will guarantee an index return and keep all the profits from active management.
Winton’s main product for Australia is a long-only equity product, although the manager’s pedigree was built from CTA trading. The global equity fund, launched in October 2009, has outperformed the MSCI world index by 12.3 per cent, cumulative and net of fees).
Grimes said Winton recently recruited a meteorologist, with a lot of experience analyzing the weather. “Given satellites can now measure the moisture level in the soil, we can make better forecasts about crop levels and therefore the future pricing of soft commodities,” he said.
