Global Wealth Allocation (GWA) has opened an Australian office, joining Research Affiliates as a provider of wealth-weighted indexing methodology with a local presence.
Native Melbournian Tony Sutton has returned home to run GWA’s two-person office, which aims to licence the firm’s alternative methodology to cap-weighted indexing to Australian funds managers and super funds.
GWA’s main foothold in Australia is State Street Global Advisors’ suite of funds run off GWA/FTSE wealth-weighted indices, which with support from Watson Wyatt and Mercer have amassed $1.2 billion locally.
Sutton said GWA’s philosophy boiled down to "wealth follows price", with a company’s cash flow and net profit seen as important indicators of its flow of wealth, and book value (or shareholder equity) seen as denoting its stock of wealth.
GWA competes directly with Research Affiliates, whose ‘RAFI’ alternative to cap-weighted indices was recently licensed by Colonial First State for local distribution as Realindex Investments, with former Perpetual institutional relationship manager for global equities, Andrew Francis, at the helm.
RAFI includes a wider range of factors than those denoting wealth in the building of its ‘fundamental’ indices, with a company’s number of employees, for instance, being used.
Another major difference between GWA and RAFI is that the GWA indices are updated quarterly, while RAFI’s reset annually. Both, however, have produced indices in partnership with FTSE.