For asset owners, there is nothing ideal about the fee deals they strike with funds managers. If there were, fee agreements between managers and investors would exhibit a clear alignment of interests across the dimensions of investment and business risk, time horizon, client service and retention and, critically, a fee which reflects the real value that managers add to portfolio outcomes, says Michael Block, general manager – investments at FuturePlus.
How quants can rebuild their image
Quantitative investing needs to change, and should do so by scaling up to produce more proprietary data, reducing excessive numbers of signals and becoming more “market savvy”, according to the global head of equity research at BlackRock, Ronald Kahn. Mindful of the terrible press that quants received when most practitioners recorded substantial negative returns in August 2007, Kahn now seeks to differentiate ‘scientific investing’ from ‘quantitative investing’.
When smiling children hide ESG horrors
It’s the new ESG-compliance index: the more smiling-children photos there are, the more problems will lurk beneath. David Gait, of Colonial First State Global Asset Management (CFSGAM), said when assessing companies’ compliance with environmental, social and governance (ESG) benchmarks, “the greater the number of pictures of smiling children in the sustainability report, the greater the problems lurking beneath”.
‘Global global’ bests ‘Australian global’
The performance of global equity managers which have Australian-domiciled funds has picked up from the terrible period over 2008 and 2009 but remains less rewarding than the experience for US-based investors over a long period. Data from Mercer Investment Consulting shows that the average active global manager offering $A strategies outperformed the MSCI by 1.3 per cent on rolling three-year numbers between December 1988 and March 2010. This compares with an outperformance of 2.3 per cent for US$ global managers on the same basis between December 1990 and March 2010.
Cooper’s costs threaten innovation
The MySuper and Super- Stream proposals from Jeremy Cooper’s review of the superannuation system have been the focus of the industry’s response. But simple and cheap isn’t necessarily good. Cooper, the former deputy chair of the market regulator, ASIC, handed the final version of the Australian Super System Review to the federal government last month. It contained 177 recommendations across 10 broad subjects aimed at improving the regulation, efficiency and integrity of the superannuation system.
How your hedge funds make money
The game’s up: hedge funds must come clean. They make money by tapping three sources of return, said Cliff Asness, founding principal of quantitative hedge fund AQR Capital Management, but only one is worth paying two and 20 for. Most hedge funds derive investment returns from three sources – true alpha, hedge fund beta and market beta – and most managers will tell you it comes from just one.
Regrouping Access Capital rocked anew
Access Capital Advisers was rocked on July 16 by the departure of its entire New York office, understood at presstime to have moved to AMP Capital Investors, as the firm redistributed the 24 per cent shareholding which departed founding director Paddy Jilek is selling back. The office had been led, since the late 2009 departure of Matt O’Donnell, by Tom Majewski, a highly regarded banker who has taken with him a team comprising Farhad Billimoria, Damien McDonald and Digby Beaumont.
Super funds’ passion for passive just grows
Some super funds are not waiting for implementation of the Cooper Review to enhance their risk budgeting through indexing, with QSuper and UniSuper revealing big passive plays last month, countered somewhat by the likes of Westscheme moving in the opposite direction. In arguably the biggest single mandate announcement in Australian superannuation history, State Street Global Advisors confirmed it was running three large passive equity mandates for QSuper, totalling $10 billion across Australian equities, international equities and global REITs.
Funds ahead of Cooper with ‘operational risk reserves’ – Mercer
Thought long forgotten from the days of crediting rates, the practice of reserving is back among Australian super funds, according to a survey by Mercer.
Chris Cuffe calls for shift to 'target benefits scheme'
The Australian superannuation industry would resemble UniSuper if Chris Cuffe had a chance to build it from the ground up. Tool for the times: Russell's liquidity 'stress test'
Russell Investment’s risk-modelling for defined-benefit funds has led to a serendipitous development of an Excel-based tool for stress-testing funds’ liquidity.
IFM's new chief wins permission to profit
The chief executive of Industry Funds Management (IFM), Brett Himbury (pictured), has won board approval to make a “modest” profit, and will be helped in that regard by $250 million across two new mandates just awarded it by Cbus. 
