There’s a widespread recognition of the need to be across all areas, you need a wide skill-set.” With many large industry funds as its clients, Frontier has carved out its own niche area of expertise in advising on unlisted assets, although this is just one part of the general consultant’s offering. Infrastructure, property and private equity are all offered as either stand-alone services or as a package, for those clients who are interested.
Managing director Fiona Trafford- Walker says Frontier thinks of itself as a “generalist firm that has specialist capabilities” and going forward, is looking to bring more specialisation into the business. “We recognise that the industry is going more down the specialist path and we’re obviously looking to respond to that but one thing we want to make sure we keep is the ability to look at the whole portfolio,” she says. “Sometimes when you look at an asset class, it’s overvalued, and if you’re a specialist that just does that [asset class] you can’t always see that because you don’t get to see the whole universe.
We’re trying to keep that whole of portfolio perspective which says ‘Maybe we like property long term, but right now it’s expensive’.” JANA adopts a similar philosophy in that the consultant believes there is no single solution to the investment challenge, and that everything is interconnected. Ken Marshman, head of investment outcomes at JANA, says while it would be efficient to try to separate investment opportunities into different sub-components, in practice it proves difficult. “Property is related to debt, which is related to equities, and private equity is a sub-set of equities, and infrastructure is part equity, part property, part fixed interest,” he says.
“While you have to have some efficiencies and you have to have some specialisation, and there are benefits of specialisation, most of our investors are interested in delivering strong, balanced outcomes and to do that requires a very strong integration across all the different investment opportunities, and understanding those risks.” He says the process of investment research cannot be separated from the process of delivery of advice, “and that is fundamental in the way we are structured”. “You can have the smartest research people but if they don’t understand what the investment problem and the client is, then all that brilliant research is no good,” Marshman says.
“On the other hand you can have people who understand the client problems perfectly well but if they don’t understand the nature of the markets then the best research will get lost.” Mercer is attempting to overcome this hurdle by keeping the communication channels open between its four boutiques. Andy Barber, global head of manager research, says Mercer is taking steps to avoid the danger of the boutiques acting separately. “The equity researchers cover equity long/short products, so there are linkages between them,” he says.
