AQR Capital, BT Financial Group’s new global equity alliance partner, has recruited Jeff Dunn, a product specialist from Queensland Investment Corporation, as its Sydney-based representative following confirmation that it would receive about $3 billion to manage in several discrete global mandates from next month.

BT has decided to appoint two managers to replace its previous equity alliance partner, Putnam Investments, with AQR to manage the global funds and Massachusetts Financial Services to manage about $800 million in regional mandates. The AQR mandates will be long-only in equity selection but long-short in country and currency selection. They will be managed to the firm’s well-performed style, which is a quantitatively based mix of value and momentum. Stewart Brentnall, BT’s head of Investment Solutions, said that the appointment of AQR and MFS concluded a long process which began when he joined BT in October 2004. Brentnall has overseen a review of BT’s sub adviser and alliance partner managers. This also involved taking inhouse the $1.8 billion formerly invested through Intech Investment Consulting’s Managed Asset Consulting Service. Intech has been retained as an adviser but the bulk of the funds has been transitioned to other managers appointed as sub advisers. Dunn, who is to relocate to Sydney from Brisbane, had been involved in the due diligence process on AQR when QIC appointed the US firm to manage part of its international portfolio. Dunn had also worked alongside Brentnall at QIC before he took up his current position at BT. David Kabiller, one of the founders of the Connecticut-based AQR, said Dunn would be involved in servicing the manager’s institutional clients. Apart from the new BT relationship, AQR over the past two years has received mandates totaling about $2 billion from clients of Russell Investment Group, JANA and Intech. AQR was founded in 1998 by a group of former Goldman Sachs executives, including chief investment officer Cliff Asness, a highly regarded quant manager. The firm has more than 100 employees managing about $US23 billion. Brentnall said that BT wanted an alliance partner, rather than sub adviser, for the key global equities because of the extra commitment this would bring. “We want the manager to have high conviction and dedicated to a long-term relationship,” he said. “The evidence is scant as to whether (multi managers) can market time their selection of managers. We foresee that we will have lots of opportunities together.” BT inherited its four alliance partners through the takeover of Rothschild Australia Asset Management by Westpac, which then took over BT as well. One of BT’s other partners, Black Rock, is currently merging with Merrill Lynch Investment Management worldwide, which may alter that relationship because Merrills has a large Australian operation which competes with BT in several areas. However Brentnall said that the intent from both sides, according to preliminary discussions, is for the relationship to be maintained. “That’s a mutual view. They have added value in our international bond portfolios and we are hopeful that they can be retained. Of course, that doesn’t mean that it couldn’t change down the track.” The two other partners are Grosvenor, for hedge funds, and AEW for international property. Meanwhile, Putnam’s former head of institutional business in Australia, Martin Franc, has joined BT as head of institutional sales. Putnam will maintain an Australian presence and has already hired a retail manager, Peter Walsh, from Zurich.

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