The asset managers who will succeed in the current low-returns environment are those that can fashion workable post-retirement solutions and have the capability to offer integrated multi-asset solutions, predicts AXA Investment Managers’ Craig Hurt.
Hurt, who is the head of the global asset manager’s Australian and New Zealand operations, says that the mandates offering multi-asset-class solutions has been one of the fastest growing parts of AXA Investment Managers’ global business in the past decade.
The asset manager now has more than $150 billion under management globally in multi-asset-class portfolios driven by demand from clients who want to take a more dynamic approach to their portfolios on the back of concerns about ongoing market volatility.
In Australia, Hurt says mid-sized super funds in the $2 billion to $10 billion range are increasingly looking to gain asset allocation expertise through awarding these types of fiduciary management mandates.
“Four years ago when I arrived in this market, there was no demand for this type of thing at all. We are seeing a significant shift in demand for this type of service,” Hurt says.
Improve the rigour of investment decision-making
Throughout Australia and New Zealand AXA Investment Managers recently held a series of roundtables looking at “sensible mandate design” post-global financial crisis.
A survey of 97 institutional investors and consultants that attended the roundtables confirmed a growing demand for dynamic asset-allocation strategies.
More than 20 per cent of respondents say they employ a purely dynamic asset allocation approach, while 53 per cent report they employ both strategic asset-allocation and dynamic asset-allocation approaches.
Pointing to the increased diversification of asset classes held in portfolios and the accompanying growth in external managers, Hurt says funds are seeing the benefit of gaining market insights from a manager who has a broad view of where relative value opportunities lie.
“We are finding we are being brought into quarterly briefings not to talk about what decisions we are making, but to find out what we are seeing across asset classes and what relative value propositions we are seeing.”
“The benefit of this multi-asset-class approach is that you are getting these types of fund managers coming in, and it doesn’t really matter where their view is, whether it is equities or bonds, and you can take that view and load it into the rest of the portfolio.”
This continues the industry trend of a blurring of the conventional separation in services provided by asset consultants and fund managers.
Hurt says that clients having access to a broad range of views can only improve the rigour of investment decision-making.
“The consultants are moving into asset management territory and clearly we are moving into their territory as well. I think that is actually positive. Ten years ago the asset managers, consultants and clients never talked, there were these kinds of walls between all of them. Now, you are getting all three in the room together,” Hurt says.