Australian fiduciary investors are well-acquainted with the resources sector. They have to be. But Duncan Goodwin, a resources specialist based in Edinburgh, believes he can make it a bit more interesting for them. Goodwin is the director of global resources for Martin Currie Investment Management, which has managed a global resources long/short fund since 2003 and a long-only version since 2006. He is a strong believer in looking at the sector from a global rather than regional perspective. “We believe that margins play out globally,” he said. “We think it’s the right thing to be diversified through the various sub-sectors we look at.

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The $13 billion multi-manager ipac has divided its $2.8 billion fixed income portfolio into six sources of risk, in an attempt to assert more control over them, and has signed four new mandates in the process.  In the restructure, ipac moved to disaggregate the various elements of credit risk – real rate, term, credit, inflation, currency and liquidity risks – and seek exposure to these factors discretely in attempts to meet the return objectives of its diversified portfolios.  Jeff Rogers, CIO at ipac, said the overhaul should enable the multi-manager to “take more ownership of the strategic positioning” of the portfolio.

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State Street Global Markets has developed a series of “turbulence” indexes to measure volatility and the unusualness of returns.  Will Kinlaw, managing director of portfolio and risk management group at State Street Global Markets in Cambridge, said the indexes were risk management tools that can be used by funds managers in all asset classes and by pension funds at the total portfolio level for stress testing. He said turbulence was a statistical measure of unusualness – the extreme relative to investors’ expectations – or the correlation of the unusual.

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Managing growth while maintaining costs and value for money for super fund members has left fund executives feeling as though they are being pulled in several directions at once.  The challenge for CEOs and boards was finding the balance between these competing objectives. Managing this balancing act and ensuring the fund had the right people in the right roles as well as being effective in their roles was key to a fund achieving its goals and successfully executing its strategy. This was the issue TWUSUPER sought to address when it asked Mercer to review the fund’s strategic plan, people strategy and organisation structure, as presented at a Fund Executives Association (FEAL) case study event last month in Sydney and Melbourne. TWUSUPER, the largest industry superannuation fund for the transport sector, has had consistent growth over the past 10 years.

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The US Federal Reserve’s second round of quantitative easing (QE2) has created tactical buying opportunities, although equity managers are divided over whether the $650 billion injection into the global economy over the next six months will create a bubble in Asian and emerging markets.  For Seres Asset Management, Australian Unity Investments’ Asian equities joint venture, the Fed is creating the “mother of all bubbles” on its turf, but that won’t stop senior portfolio manager Ken Hu from selective bullish buying.  “You’re going to see a lot of money flow into Asian assets.

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Staff ownership of funds management firms was concentrated among boutiques, but not confined to them, said George Walker, the chief executive of US-based Neuberger Berman, talking about the differences for a large manager in being staff or institutionally owned. Australian super funds have had a love affair with boutique managers since the mid-1990s, after MLC, a bellwether multi-manager, backed the nascent Portfolio Partners spin-off from County Australia. Since then, boutiques have mushroomed, especially Aussie equities boutiques. Australia had been described, by former Russell Investments chief Alan Schoeinheimer, and others, as ‘the land of boutiques’. Russell, Mercer and Intech (now Ibbotson Associates) have published studies to show that boutiques, indeed, outperformed for various reasons and up to a point. Capacity was certainly a big limitation and early investors enjoyed more rewards than the later ones.

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If AMP succeeds in its takeover bid for AXA Asia-Pacific (AXA), it’s likely the merged entity would be heavily reliant on internal financial advice channels to continue reaping the vast majority of its retail investment flows and funds under management (FUM), according to research from Citi.  AMP currently sources 90 per cent of its $36.3 billion in funds under management (FUM) from internal operations, such as its network of tied financial planners, according to Citi’s analysis of Plan for Life’s records of FUM and flows in the 2009-10 financial year.  Importantly, the paper, Trends in Wealth Management Supplement, which followed an October paper Trends in Wealth Management: a growing role for intrafund advice, did not concern the wholesale funds managed by AMP in discrete mandates.

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Fundamental equity long/short managers have attracted about $4 billion in funds under management to claim the lion’s share of the market as assets in quantitative strategies fell a long distance from a peak of $8 billion in 2007, according to Goldman Sachs. Melbourne boutique JCP, whose fundamental 150/50 strategy has neared capacity at $1 billion under management, is believed to be among the small group of managers that have come to dominate the equity long/short space. In an October research note, 130/30 Strategies: Relaxing Constraints To Target Higher Returns, Goldman Sachs stated the amount of capital in fundamental long/short strategies in 2007 was dwarfed by the $8 billion in quantitative counterparts, which is understood to have fallen to about $2 billion.

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Colonial First State’s Institute of Advice, the centre of knowledge for Commonwealth Bank-affiliated dealer groups representing $35 billion under advice, is tendering its fund ratings contract amid signs the incumbent faces a tough battle.

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