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Deutsche Asset Management (DeAM) has re-emerged with an active
Australian fixed income mandate, just two years after selling its local
businesses in bonds and domestic equities to Aberdeen Asset Management. The
$120 million mandate is the first for the three-man team poached from Invesco’s
Melbourne office a year ago – Chris Siniakov, Andrew Canobi and Steve Sutcliffe
– and reflects a renewed interest in the asset class as governments and
semi-governments bolster their debt issuance and increase opportunities for
active management, according to DeAM’s Australian chief executive, Stephen
O’Brien.
Siniakov, whose team manage the Australian component of DeAM’s global
bond funds, was recently awarded a seat on the manager’s global process
management group for the asset class – joining a group of seven out of 150
fixed income executives worldwide. After finalising a deal to exit retail
distribution in Australia – outsourcing responsible entity duties for its
funds to Wilson HTM and distribution rights to former CEO Chris Larsen’s new
Ironbark venture – DeAM has stepped up marketing of its mandate-based offering
to the wholesale market.
Property and alternatives are currently the biggest
Australian-sourced wholesale asset classes for DeAM (it manages infrastructure
portfolios for State Super NSW, for instance) however a local institution has
just awarded it a $500 million mandate for an ‘index plus’ global equities
process known as ‘Diversification Based Investing’. “It was designed for the Ford Pension Plan in
the US,
with the goal to diversify returns away from typical active managers and
consistently outperform, with less downside risk.
For the last eight years the
strategy has outperformed in every single year and has added an average 250
basis points to the global benchmark,” O’Brien said. “It takes sector and
regional tilts to diversify away from momentum, but it’s priced like an
indexing strategy. Investors are closely monitoring their fee budgets and
they’re looking at different forms of enhanced beta, and this is definitely in
that space.”
O’Brien has embraced the theory that institutional investors are
beginning to seek larger relationships with fewer service providers. “Funds
want to use every source of research and ideas that are available, and that
includes their funds managers,” he said. As for DeAM making a return to Australian
equities, that other asset class in which it sold its local business to Aberdeen two years ago,
O’Brien said only “watch this space”.
