Plato Investment Management has lured a regional equities chief from State Street Global Advisors (SSgA) as it makes its case against passive high-dividend yielding strategies.
Todd Kennedy will leave SSgA as head of Asia ex-Japan equities, where he oversaw $8 billion in funds under management, to join Plato as senior portfolio manager in February next year, confirmed Don Hamson, managing director of the quantitative equities boutique.
It’s the second time Hamson has hired Kennedy: before founding Plato in 2006, Hamson recruited Kennedy into SSgA when from Merrill Lynch, where he was head of equity derivative research for Asia ex-Japan markets.
Kennedy’s work in after-tax and equity-income investment strategies at SSgA – which followed Hamson’s launch of an equity-income fund at the manager four years ago – would gel with Plato’s interests in this area, manifest in a new high-dividend yield strategy the boutique has launched, the managing director said.
Hamson was critical of passive income strategies on the market, some of which sustained “pretty big sector tilts” towards financials and away from resources companies so that “a lot of your performance will be determined by whether banks outperform resources”.
“You don’t have to be overweight banks all of the time – you can hold them for parts of a year and move in and out as they pay dividends,” he said, asserting that an active approach to this universe, responding on the quantitative signals flagging short-term return expectations and dividend yield, was more dynamic and less risky.
Meanwhile other passive strategies, such as exchange-traded funds (ETFs) based on the S&P/ASX Dividend Opportunities Index, capped their exposure to any single stock at 4 per cent, meaning they would always be underweight the big four banks in the 50-stock product, he pointed out.