State Street Global Advisors (SSgA) expects to launch an Australia-focused fund within its global equities total return strategy during the first quarter of calendar 2008, while seeking seed money for a newly-built Asia ex-Japan vehicle.
Research into the implementation of the quantitative, Australia-focused total return vehicle is approaching its final stages, Arlene Rockefeller, SSgA global head of equities, said. The fund has not yet been seeded, and will be run by the manager’s current Australian equities team. “It will be Australia-focused, and avoid volatile sectors,” Rockefeller said. Funds grouped in the total return strategy are not benchmarked against an equities index. They avoid high-growth, volatile sectors such as information technology and look for safer bets showing good momentum. The Australian version will aim to take on as much risk as, for example, the ASX 200 index, which could be used as a reference or comparative portfolio, Anthony Golowenko, SSgA head of active Australian equities, said. “;We expect the tracking error versus the benchmark to be higher going from quarter-to-quarter, but total risk will be similar to the benchmark,”; Golowenko said. The investment horizon for the fund would be five years. “;We’re departing from the benchmark. Over five years we expect greater variance.”; Golowenko said the total return product would be different from other SSgA Australian equities funds since it would not assign a benchmark weighting to individual stocks or sectors. “;Total return is a zero position; it’s not plus or minus 2 or 3 per cent from an index weight.”; Meanwhile, the manager is marketing a quantitative long-only Asia ex-Japan fund, including developed and emerging Asia, to European and Australian instituional investors. SSgA currently runs a long/short fund in developed Asian markets, as part of its Asia-Pacific ex-Japan alpha model. “;We’re ready to go, pending an investor giving us cash,”; Todd Kennedy, SSgA senior portfolio manager, said. So far, selected domestic institutional investors have been briefed about SSgA’s new Asia ex-Japan long-only fund, while many European investors have been informed. Kennedy said the fund would access a universe of 11,000 stocks, and that Taiwan, Korea and China held good opportunities. There was also a possibility that these countries could be grouped into the manager’s long/short funds, he added.
Since taking over the top job at the $44 billion Funds SA more than a year ago, chief executive John Piteo has ushered in an investment function overhaul and wrapped up an important stage of the fund’s five-year data transformation program. It pledges to recentre around investment performance and more efficient processes, as the “missing piece” has been found in incoming CIO Con Michalakis.
Darcy SongJanuary 10, 2025
