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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.

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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.

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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.

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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.

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The board of the $1.5 billion Professional Associations Super (PAS) has authorised its investment team to perform dynamic asset allocation.

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The industry fund-owned Members Equity Bank has a bold plan to regain the ground it lost to the big four banks during the post-GFC malaise in securitisation markets.

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EquitySuper, the $1 billion fund controlled by Equity Trustees, has awarded a $20 million mandate to Tribeca Investment Partners for its long-standing small-cap fund.
The mandate follows EquitySuper’s integration with the $280 million OAMPS fund. Equity Trustees acquired the management rights to the fund last November from Wesfarmers. EquitySuper was formerly known as Wealthpac.

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The Australian custody market will top $4 trillion by 2025, according to a report on that part of the funds management industry by Rice Warner Actuaries. But all is not good news for the custodians.

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Fresh from its industry-changing win with REST Super, State Street Investor Services has poached a competitor’s head of sales to become its first business development manager based in the industry fund capital of Melbourne.

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The Australian Institute of Superannuation Trustees boosted its revenue and returned to an operating surplus during calendar year 2010, it was revealed at yesterday’s annual general meeting held before the start of the Conference of Major Superannuation Funds on the Gold Coast.

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MLC Group Insurance is claiming a victory with its free non-super salary continuance offer called ‘Best Doctors’.

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