The global rate of private equity fundraising remains at its slowest since 2003, however there are some positive signs for the asset class with more general partners holding interim closes on funds during the first quarter of 2011.
We don't need the whole industry now: admin alliance
A spokesman for an alliance formed by seven member administrators, which aims to collaborate to deliver Superstream initiatives, recognises there are some notable absences from its ranks but that it’s more important to get an industry-led response happening now.
Making news in March 2011
Everything that happened in the worlds of superannuation, funds management and investment administration last month… John Langoulant was appointed as chairman of GES B, the $11.5 billion Western Australia public sector fund, for a five-year term. Langoulant is the CEO of Oakajee Port & Rail and is a former chief of the Chamber of Commerce and Industry of WA. General Electric expects to be required to contribute about US$1.4 billion to its GE Pension Plan in 2012 — the first employer contribution to the plan since 1987, the company announced last month. The plan’s funding status fell from 87.5 per cent to 86.2 per cent over the year to December 31, 2010. Implemented Portfolios, a consultant to dealer groups on portfolio construction, affirmed defensive strategies for its model portfolios, as developed markets continued to show subdued growth outlooks in its investment committee’s 10 year growth forecast.
PE managers adrift in consultant limbo
The private equity industry has done a poor job of convincing asset consultants and superannuation fund trustees of its capabilities, conceded Les Fallick, founder of placement agent Principle Advisory Services. Speaking at the AVCJ Private Equity and Venture Forum, held last month in Sydney, Fallick said most of the support the industry had won since the mid-1990s was mainly from private equity specialists within super funds. This meant private equity vendors aiming to raise funds often met strong resistance from investment committees because relationships with trustees were poor.
In emerging markets, new betas are still better
Until now, emerging markets have been bought on the growth of their underlying economies and the relative outperformance of their share markets over the past two decades. But investors can still do better than this. Traditional investment approaches are facing challenges in emerging markets, according to Dr Henry Zhao, CEO of Beijingbased Harvest Fund Management. With most emerging markets, such as China, having beaten Western economies for 20 years, some investors are looking to lighten up their exposures. However work by Dr Zhao and Harvest shows that there are better ways to construct a beta portfolio in China and other emerging markets than the traditional market capitalisation-weighted benchmarks. And because the emerging markets are still less efficient than developed markets, there is a lot of alpha to be had on top as well.
Shock and ore: commodities’ strong run
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Commodity markets may provide the clearest insights into the short-term risks that global investors now face. Civil uprisings across the Middle East, sparking the type of geopolitical “event risk” that can benefit commodity prices, have driven up the price of oil and incited fears among investors that it could undermine the global recovery, said Colin O’Shea, head of commodities at Hermes Fund Managers. Throughout February and into mid-March, when Investment Magazine went to press, the price of oil surged by more than US$20 a barrel to beyond US$100 as investors feared the people of Saudi Arabia would, like those of Egypt and Libya, openly protest against their authoritarian rulers. Investors’ uncertainty was obvious as equity markets sold off and gold was bought for more than US$1,400 an ounce.
The science of Winton Capital
David Harding dismisses investment jargon like ‘market inefficiencies’. The models developed by a 100-person strong research team, which includes 80 PhDs, aim to simply “make inferences about the future”. Winton is a London-based commodity trading advisor (CTA) hedge fund with $20 billion in funds under management. But Harding described it as a scientific research firm. Its algorithms are developed through statistical analysis that peers far back into the history of financial markets, because this provides some idea, within a range, of what will happen next. “We look for data going back to the 1950s. Most stock-pickers look back a month or two.” The manager will not attempt to predict the exact value of, say, the Australian dollar in six months’ time, but forecast the range in which it will be and place these bets through futures contracts, Harding said. This process is repeated systematically for stocks worldwide and, more often than not, the manager is right.
Activism’s gentle face comes to Australia
Australia has a few fund managers – just a handful – that some company boards may consider as being ‘activist’, but this select group tends to be vocal only rarely and then never request board representation or long-term involvement in the company. But in the US, activism is almost an asset sub-class. Jeffrey Ubben and George Hamel Jr, founders of the 10-year-old USbased activist manager ValueAct Capital, which has been scoping out Australia to offer its services, don’t see themselves as activist investors in the way we may perceive corporate raiders who use the press, proxy battles, threats and worse to affect change at a company. They are proud of the fact that in only about 50 per cent of their investments over the last decade have they exercised their rights to a board seat.
BGI, McKinsey veterans driven to profitBGI, McKinsey veterans driven to profit
It will be the distinct hybrid of fundamental company analysis and quantitative execution that enables BCS Capital, the funds manager launched by former Barclays Global Investors (BGI) and McKinsey & Co. executives, to move ahead of the market as stock-specific information is released, according to John Bowers, a co-founder of the firm. Bowers, the former CEO at BGI Australia and global head of fixed income, has teamed up with Justin Herlihy, BGI’s ex-head of European fixed-income alternatives and John Stuckey, the former Australian managing partner at McKinsey & Co., to launch the new Australian equities boutique BCS Capital is the culmination of four years’ research, in which the team’s knowledge of industrial economics and quantitative techniques enabled it to discern the distinct “profit drivers” of listed Australian companies and measure how they respond to information flows, Bowers said.
MLC ups the ante with group life feature
MLC Group Insurance is claiming a victory with its free non-super salary continuance offer called ‘Best Doctors’.
