investment managers

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investment managers

  1. 1. investment managers April 2010 ipac gives you access to the expertise of specialist investment managers across many different asset classes. You can achieve broad diversification quickly and easily, providing exposure to a wide range of opportunities worldwide and reducing risk. A selection of the managers currently employed by ipac are profiled below. Many of the names will be familiar to you but others may not. This reflects ipac’s focus on finding leading managers – whether they are large global firms or small boutiques. Australian shares BlackRock Asset Management Australia (BlackRock Australia) is one of the world’s largest institutional investment managers. BlackRock Australia is an active Australian shares manager, and seeks to consistently add value in a risk- controlled way. BlackRock Australia uses a structured investment process designed to systematically identify and exploit mispriced securities on a daily basis. The manager takes a number of slightly larger or smaller positions than the index in individual shares, with the aim of producing a return that exceeds the index over time. Schroder Investment Management (Schroders) is a global asset management company that is focused purely on fund management. Schroder established its Sydney office in 1961. Schroders is a bottom-up, active growth manager. The investment process is simple, clearly defined and well structured. It is also very pragmatic. Schroders seeks to identify quality companies with strong returns on capital. Schroders defines growth as those companies that have a return on equity (ROE) that is in excess of its cost of capital and which have the ability to reinvest capital at such a high rate of return on an ongoing basis. GMO Australia (GMO) is an independently owned private company based in Boston, USA. GMO’s sole business is providing investment management services to institutional investors. GMO is substantially employee-owned. The firm was founded by respected investment professionals - Jeremy Grantham, Richard Mayo (retired) and Eyk Van Otterloo. The Australian equity team forms part of GMO Australia. The GMO investment process is quantitative, implementing both value and momentum strategies. Two quantitative models are used within each of these categories. For this mandate there is greater emphasis on momentum strategies. The Australian equity team is part of Lazard Asset Management Pacific (Lazard). Lazard is a wholly owned subsidiary of Lazard Asset Management. Lazard Asset Management is ultimately owned by Lazard Ltd, which is a public company listed on the New York Stock Exchange. Lazard is a valuation oriented manager, embracing fundamental analysis to support a bottom-up stock selection style. Their primary stock-selection screen identifies companies that are trading at a discount relative to their intrinsic value. Often Lazard’s stock ideas are contrarian to prevailing sentiment. Maple-Brown Abbott Investment Managers (MBA) is wholly owned by staff and directors. MBA is one of the best resourced teams in Australia. The team’s calibre, experience, size and stability are an important point of differentiation for the manager in the Australian marketplace. MBA is a conservative, bottom-up stock picker employing a disciplined value approach. Portfolios comprise stocks that represent good fundamental value. Stock selection is based on analysis of price-to-earnings, price-to-cash flow, price-to-book and dividend yield ratios. MBA is a long-term investor and this results in very low portfolio turnover. International shares AllianceBernstein Growth (AB Growth) is a unit of AllianceBernstein Australia, a subsidiary of AllianceBernstein L.P . AllianceBernstein L.P has offices in 48 cities across 25 countries. AB Growth is an active, fundamental, bottom-up . manager that employs a growth-oriented approach to construct a portfolio that is managed by global research industry analysts. AB Growth believes growth companies experience two distinct phases in their growth cycle. The first, the acceleration phase, reflects growth that often gains momentum faster than consensus expects. During this stage it is unanticipated earnings acceleration that drives the company’s stock performance. AB Growth seeks to recognise this growth potential early and buy the stock before its price fully reflects the faster-than-consensus growth rate. The second opportunity occurs when a company approaches the period when consensus expects the growth company to mature and therefore start reverting to the mean, but instead, the company sustains relatively strong growth for longer than the market expected. Being able to identify the potential for this continued upside early provides the opportunity to buy the stock more cheaply, before the stronger growth becomes apparent to the rest of the market. Arrowstreet Capital (Arrowstreet) is fully owned by its staff, and has one of the most experienced global equity research groups in the investment management industry. The organisational structure, independence and links to academia have been key factors in Arrowstreet’s growth. Arrowstreet’s research capability is focused on its ability to identify, measure, and exploit signals that are slow to be reflected in equity prices. Portfolios are constructed by carefully balancing the trade-off between a stock’s expected return, its contribution to portfolio level risk, and its opportunity cost relative to trading costs. Arrowstreet seeks to take advantage of both behavioural mispricings (e.g. value and momentum signals) and informational mispricings (e.g. earnings signals).
  2. 2. BlackRock Asset Management Australia (BlackRock Australia) is the largest manager of index funds in the world. BlackRock Australia take an index approach that is benchmarked against the MSCI World ex Australia Accumulation Index. BlackRock Australia aims to deliver a return slightly ahead of the benchmark after fees. AllianceBernstein Value (AB Value) is a unit of AllianceBernstein Australia Limited, a subsidiary of AllianceBernstein L.P AB Value has been managing assets in accordance with a value-oriented investment philosophy since 1967. AB . Value’s strategy is grounded in intensive fundamental research across all geographies and markets. Bernstein seeks to buy stocks with the greatest amount of long-term earnings for the best price. It uses its deep fundamental research capabilities to distinguish those companies that are undergoing temporary stress from those that deserve their depressed valuations. AB Value also seeks to exploit mispricings created by investor overreaction. Enhanced Investment Technologies is an independently managed subsidiary of the Janus Capital Group Inc that was founded in 1987. Enhanced Investment Technologies is an active global equities manager that employs mathematical algorithms that seek to invest in stocks with high relative volatility and low correlation to build a portfolio that will generate an excess return over the benchmark. The manager also periodically rebalances the portfolio to ensure target weights are maintained. Epoch Investment Partners (Epoch) is a boutique specialist investment manager listed on NASDAQ. Epoch invests in companies with an ability to consistently generate free cash flows and to properly allocate it among dividends, share repurchases, debt pay downs, internal reinvestment opportunities, and/or acquisitions. Epoch defines these uses of free cash flow (dividends, share buybacks and debt reductions) as ‘Shareholder Yield’. ipac’s exposure to Epoch is through the Grant Samuel Epoch Global Equity Shareholder Yield Fund. GMO Australia (GMO) was founded in 1977 and is fully owned by its members (see Australian Shares for description). GMO’s innovative quantitative approach is grounded in fundamentally based investment principles. GMO is a quantitative manager that combines price and earnings momentum models with an intrinsic value model to select stocks. LSV Asset Management (LSV) is owned jointly by its employees and SEI, a publicly-traded US financial services company. Its sole focus is the management of wholesale US, and global equities. LSV uses a quantitative investment model that selects out-of-favour (undervalued) stocks that have the potential for near-term price appreciation. This reflects a belief that out-of-favour stocks are likely to produce superior returns if their future growth exceeds the markets’ low expectations. Portfolios are country and currency neutral, although active tilts between sectors are accommodated. LSV believe that superior long-term results can be achieved by systematically exploiting the judgmental biases and behavioural weaknesses that influence the decisions of investors. Vanguard Investments Australia (Vanguard) has a global presence with offices across the United States and in Melbourne, Sydney, Brisbane, Perth, Brussels, Tokyo, London and Singapore. In Australia, Vanguard has provided index solutions for more than 10 years. They employ optimisation techniques which involve selecting a representative sample of shares in the relevant Index to form the underlying Fund’s portfolio. Vanguard holds most of the shares in the Index but allow individual share weightings to vary marginally from the Index occasionally. The manager also invests in stocks that are expected to be included in the index. Australian listed property Perennial Real Estate Investments (Perennial) is an active manager of global listed property securities with a highly experienced investment team. The manager believes outperformance is solely due to security selection. The manager does not attempt to replicate the regional or structural bias of any index. Using its proprietary fundamental research, risk evaluation and relative valuation framework, Perennial seeks to buy listed, or soon to be listed, Australian property securities that offer attractive cashflow growth, have strong management teams and consistent income characteristics. The manager has the underlying belief that securities with these characteristics will offer superior long-term investment outcomes. The manager can opportunistically invest in non-benchmark and offshore holdings, leveraging its global research capabilities. Vanguard Investments Australia (Vanguard) has grown to be one of the world’s largest and most respected investment management companies. Vanguard is a specialised index manager. The investment process used for ipac in Australian listed property is designed to deliver small excess return above a customised benchmark. The customised benchmark consists of a significant proportion of the largest trusts in the ASX 300 A-REIT Index. Australian cash Macquarie Investment Management (Macquarie) is a wholly owned subsidiary of Macquarie Bank. The domestic fixed interest business is part of the Fixed Interest, Commodity and Currency division. This index strategy will replicate the UBS Australian Bank Bill Index over the medium-term. At inception, the strategy has a tilt toward credit.
  3. 3. Australian fixed interest Macquarie Investment Management (Macquarie) is a wholly owned subsidiary of Macquarie Bank. The domestic fixed interest business is part of the Fixed Interest, Commodity and Currency division. The multi-factor investment process generates value add through a combination of systematic, technical and judgemetal processes. In the medium-term, the portfolio is expected to closely resemble the risk and liquidity exposures of the benchmark. Macquarie has developed a proprietary model for security selection of government and semi government securities. The process to select non-government securities is bottom-up and fundamentally oriented. Global fixed interest BlackRock Financial Management (BlackRock) is a large US-based investment manager that specialises in fixed interest. BlackRock uses multiple strategies to add value. It uses traditional strategies – duration, country and currency positions in measured ways while exploiting relative value strategies that include yield curve, sector allocation and security selection. PIMCO Australia (PIMCO) is a specialist fixed interest investment management firm. PIMCO’s portfolios are built to generate alpha from country allocation, portfolio duration, curve and sector positioning. The manager’s focus is on identifying long term (secular) and medium term (cyclical) drivers of fixed interest markets. The investment objective is to add value without increasing risk by using numerous and diverse sources of value add, that are largely uncorrelated. Global smaller companies Arrowstreet Capital (Arrowstreet) is fully owned by its staff, and has one of the most experienced global equity research groups in the investment management industry. The organisational structure, independence and links to academia have been key factors in Arrowstreet’s growth. Arrowstreet’s research capability is focused on its ability to identify, measure, and exploit signals that are slow to be reflected in equity prices. Portfolios are constructed by carefully balancing the trade-off between a stock’s expected return, its contribution to portfolio level risk, and its opportunity cost relative to trading costs. Arrowstreet seeks to take advantage of both behavioural mispricings (eg value and momentum signals) and informational mispricings (eg earnings signals). Dimensional Fund Advisors LP (Dimensional) is a privately held organisation. The firm is owned primarily by employees and directors, and manages assets exclusively for institutional investors and clients of registered financial advisors. Dimensional uses a unique process which brings broad small cap exposure to the sector. The manager systematically constructs portfolios that are designed to capture size premia from stocks that are smaller than those in the benchmark. Smaller sized stocks tend to be less liquid, and this premium is captured systematically through patient trade execution. Pyramis Global Advisors (Pyramis) is the wholly owned US institutional asset management subsidiary of Fidelity Management & Research Company, headquartered in Boston for US mutual fund clients. Pyramis aims to generate active returns by using its vast resources of analysts to evaluate ideas in a fundamental, bottom-up way. The manager brings a modest growth tilt which offsets the value style tilt of Arrowstreet. Global emerging markets GMO is a private partnership founded in 1977, whose sole business is investment management. The global emerging markets team is well resourced, investment professionals are based mainly in San Francisco. The global emerging markets strategy managed by GMO is predominantly a quantitative process with supplementary judgemental input at both the country allocation and stock selection levels. The strategy has a value orientation but also incorporates momentum for diversification purposes. The manager’s alpha edge is driven by robust and disciplined modelling framework. GMO also have committed resources dedicated to quantitative research in emerging markets. Esemplia Emerging Markets (Esemplia), which is an autonomous investment affiliate within the Legg Mason Group, has a large and experienced team dedicated to emerging markets. Esemplia adopts a disciplined approach to investing through a systematic six stage process which incorporates the team’s highest conviction ideas within the portfolio. The investment process is a combination of top-down and bottom-up qualitative research. The portfolio is fundamental by nature with valuation acting as a key anchor in the investment process. Given the volatility of emerging markets investing, performance expectations should be viewed over a full market cycle.
  4. 4. Global listed property CBRE Global Real Estate Securities (CBRE) is part of a specialised real estate group that has two core global businesses: real estate services and real estate investment. CBRE seek to identify under-valued securities with strong management that offer secure income and the potential for superior risk-adjusted returns. CBRE combines top-down macro economic trends with bottom-up stock analysis, capitalising on the vast direct property resources it has within the group. The portfolio is expected to be broadly diversified across sectors and countries. LaSalle Investment Management (LaSalle) is a specialised global property securities investment manager. Parent company, Jones Lang LaSalle, is listed on the New York Stock Exchange and is a leading global property services provider. LaSalle’s investment process is focussed on identifying undervalued securities that have high quality assets and strong, credible management that can select, develop and manage these assets to grow future cash flows. LaSalle leverages off the vast resources and real time information provided by its direct property group LaSalle Investment Management and the broader Jones Lang LaSalle group. Vanguard Investments Australia (Vanguard) has grown to be one of the world’s largest and most respected investment management companies. Vanguard takes an index approach to the management of international property markets. Vanguard invests in property securities listed on the exchanges of 20 of the world’s major economies. Alternative income PIMCO Australia (PIMCO) is an institutional money manager specialising in fixed income management. PIMCO has a high level of expertise, divided into a generalist/specialist team structure. PIMCO is extremely well resourced. PIMCO’s Short-Term strategy captures excess returns by exploiting four primary structural inefficiencies found in the bond yield curve (term premium, liquidity premium, credit premium and volatility premium). The strategy is applied without reference to constituents of the Barclays Capital Global Aggregate Index and is benchmarked to the UBS Bank Bill Index. Alternative defensive BlackRock Asset Management Australia (BlackRock Australia) is one of the world’s largest institutional investment managers (see Australian Shares for description). The BlackRock Australia Total Return Multi-Opportunity Fund is a single manager, multi-strategy fund of hedge funds. BlackRock Australia’s quantitative investment process seeks to deliver consistent, risk-controlled absolute returns over time that are uncorrelated with traditional asset classes. There are more than 30 underlying strategies that can be broadly categorised into four investment approaches: Equity Long/ Short, Global Macro, Alpha Transport and Fixed Income Long/Short. Prisma Capital Partners is a New Jersey based fund of hedge funds manager. It was founded in 2004 as a joint venture between three former Goldman Sachs partners and AEGON USA Investment Management, a division of the global insurance carrier AEGON. The Prisma Global Multi-Strategy Fund invests across a range of strategies and investment markets, with great emphasis on diversification, risk management and downside protection. It deliberately seeks to derive its active return with a lower correlation to traditional asset classes, such as shares and bonds, compared to other multi-strategy-type funds. Oak Hill Advisors (Oak Hill) was established in 1991. The firm specialises in investment in debt securities. Oak Hill is majority owned and controlled by its five senior partners. Oak Hill has offices in New York and London. The current market dislocation has created opportunities to buy the secured debt of companies whose equity we generally buy, at prices that potentially offer returns in excess of the general equity market. Intense research and experience enables Oak Hill to identify credit opportunities likely to recover their value and that will also benefit from the contraction in credit spreads as financial markets stabilise. Alternative growth Vanguard Investments Australia (Vanguard) has a global presence with offices across the United States and in Melbourne, Sydney, Brisbane, Perth, Brussels, Tokyo, London and Singapore. In Australia, Vanguard has provided index solutions for more than 10 years. Vanguard’s Global Infrastructure Fund provides a way to gain exposure to around 124 companies with activities concentrated in utilities, toll roads, transmission and distribution, and water projects.
  5. 5. TCW is a US based manager established in 1971. The firm invests in US fixed income, US equities, Alternatives and International strategies. In 1989, TCW established a specialist group that invests in Mortgage Backed Securities. TCW invests in a diversified portfolio of securities high up in the capital structure of private US mortgage securitisations. TCW have well established security selection skills to capture this differentiated source of return. Credit Suisse First Boston manages a fund of private equity funds for clients worldwide and is part of the global Credit Suisse Group. Macquarie Global Infrastructure is part of the Assets & Infrastructure Group of Macquarie Bank Limited, a premier global investment bank. Propel Investments is an independent private equity manager focused on direct mid market (buy-out, buy-in and expansion) investments in Australia and New Zealand. Propel Investments has around A$600 million in assets under management. Currency State Street Bank & Trust Company provides currency services to institutional investors and pension funds globally through its Currency Management group, State Street Associates. ipac asset management limited ABN 22 003 257 225 (ipac), AFS Licence No. 234655, is responsible for determining the structure and risk profile of each portfolio in the Pathways and Strategic Investment Service Strategies. ipac is the Responsible Entity for the Pathways and Strategic Investment Service Strategies. The managers listed are employed for the Pathways and Strategic Investment Service Strategies, which invest in some or all of the sectors and managers shown. The investment managers are current as at April 2010 and may change over time. This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. You should obtain a copy of the relevant Product Disclosure Statement (PDS) before making a decision to invest in any financial product. While ipac asset management limited believes that the information contained herein is correct, no warranty of accuracy, reliability or completeness is given and, except for liability under Statute which cannot be excluded, no liability for errors or omissions is accepted. ipac asset management limited Level 31 Grosvenor Place, 225 George Street, Sydney 2000. Telephone 02 9373 7000 Facsimile 02 9373 7111

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