Fund Times: Updates for BT, ING, MLC, Perpetual, Schroders
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In recent news from the funds management industry you may have missed, BT Investment Management has changed its currency management strategy for global shares; ING has restructured its business and replaced its CIO; and MLC has given its three global property managers equal weightings. On the people front, Perpetual has had changes in domestic property, multi-sector, and domestic equities, and Schroders has added to its domestic shares and global quantitative teams.
BT alters currency management strategy
BT Investment Management has adjusted the currency management strategy for its diversified global share funds. Quantitative investment manager AQR Capital Management's mandate was previously to attempt to add value from stock selection, and also from country selection and currency management through derivatives overlays. Citing unprecedented volatility and increased implementation costs, BTIM has elected to take the currency management process in-house, and to cease the country overlay process. AQR's focus will be on adding value from stock and industry selection.
We have made adjustments to the appropriate sections of our qualitative research report, and reconfirmed our existing Morningstar Recommendation of 'Recommended'. The change affects funds such as BT Investment – BT International, BT Wholesale – Core Global Share, BT Wholesale – International Share, and BT – Global Share.
ING restructures funds management business, replaces CIO
ING Investment Management has restructured its Australian funds management business. The firm has created a new Multi-Strategies Group combining the former INGIM Macro Strategies & Implementation Group, and the former OptiMix multi-manager business' Portfolio Solutions Group. Former OptiMix Chief Investment Officer Emmanuel Calligeris is assuming the role of CIO for the new Multi-Strategies Group, while Chief Investment Officer Macro Strategies and Implementation Eric Siegloff is leaving the firm on 1 December. (Siegloff had assumed his role in October 2007, after David McClatchy's promotion from Chief Investment Officer to Chief Executive of the local ING funds management business.)
Siegloff had also since May 2005 headed the investment team responsible for ING's locally-offered international share funds, among them ING Wholesale – Global Share and ING OneAnswer Investment Portfolio – ING Global Share, drawing on ING investment teams located in The Hague, Tokyo, and New York. We downgraded our Morningstar Recommendation for this strategy to 'Hold' in May 2007, arguing that despite strengthened team resources and greater currency management expertise, we found it hard to get enthused about the underlying managers, while the recalibrated portfolio construction process had still to earn its stripes. Siegloff's impending departure means another round of reconstruction for this strategy, and our preference continues to lie with more stable and established options.
The key issue for OptiMix investors is that Emmanuel Calligeris' new responsibilities as Multi-Strategies Group CIO mean that he will no longer be dedicated to overseeing and managing the multi-manager team's processes and intellectual property development. We will be reassessing our existing reports and Morningstar Recommendations for OptiMix's investment strategies.
MLC rebalances global property manager weights
MLC Investments has rebalanced its global property investment manager weightings. The three underlying investment managers – LaSalle, Morgan Stanley, and Sydney-based Resolution Capital – now all have a third of portfolio assets to manage. (LaSalle and Morgan Stanley previously had 40.0 percent of MLC's global property assets each, and Resolution – appointed in December 2006 – had 20.0 percent.) MLC stated that Resolution had now justified equal weighting with the more established managers after demonstrating its ability to transfer its domestic property management expertise into global property investing. Regular incoming funds flows were used to implement the manager rebalancing.
The funds affected are MLC Wholesale Global Property Class A, MLC Wholesale Global Property Class B, MLC MasterKey Superannuation Global Property, and MLC MasterKey Pension – Global Property. The largest global property holdings in the MLC portfolio at 30 June 2008 were British Land (4.56 percent), Hong Kong Land Holdings (4.26 percent), Mitsubishi Estate (3.98 percent), and Australian REIT Westfield (3.94 percent).
Perpetual staff changes in property, multi-sector, domestic equities
Perpetual Investments has integrated its property securities investing into the firm's broader Australian Equities team, headed by John Sevior. The role of Head of Property Securities, occupied by Sean Murray since 2003, has been made redundant, although Murray will remain with the firm for several months as part of the integration process. Responsibility for managing the firm's domestic A-REIT assets now rests with Anthony Cay, a Perpetual employee since 1996 who has concentrated on property securities since 1999.
We have updated the relevant sections of our existing research report for Perpetual's listed property strategy, which retains its existing Morningstar Recommendation of 'Investment Grade'. The principal funds affected are Perpetual's Wholesale Property Securities, Perpetual WFIA Property Securities, and Perpetual WFI Property Securities.
Elsewhere, Perpetual has hired Michael Blayney as Portfolio Manager for multi-sector funds, headed previously by Richard Brandweiner, who was appointed last year as Group Executive of the firm's income and multi-sector businesses. Blayney has worked for more than a decade in superannuation and asset consulting, most recently with Watson Wyatt. Brandweiner will still sit on Perpetual's Asset Allocation Review Board, which oversees the strategic and tactical asset allocation processes. (The other members are Group Executive, Global Equities Emilio Gonzalez and Senior Portfolio Manager, Quantitative Investments Vasant Khilnani.)
Our fund research analysts are currently undertaking qualitative assessments of Perpetual's multi-sector funds, to be published in coming months. The principal wholesale funds we'll be covering are Perpetual's Wholesale Diversified Growth, Perpetual's Wholesale Conservative Growth, and Perpetual's Wholesale Balanced Growth.
In other Perpetual people news, the firm has also hired two analysts, Andrew Blakely and Andrew Corbett, to work with James Bruce on analysis of energy and resources stocks. Blakely worked previously in energy analysis roles at Macquarie Bank, JP Morgan, and UK energy consultant Wood Mackenzie. Corbett's background includes stints working for mining companies and contractors such as Lionore Mining International and the Normandy Group, most recently with Orica.
Blakely and Corbett will work on Perpetual's recently-launched global resources funds, among them Perpetual WFIA Perpetual Global Resources and Perpetual WFS Perpetual Global Resources, and contribute to the management of funds such as Perpetual's Wholesale Australian, Perpetual WFI Perpetual's Australian Share, and Perpetual WFS Perpetual's Australian Share, which currently have Morningstar Recommendations of 'Recommended'.
Schroders adds to domestic, global quantitative equities teams
Finally, Schroder Investment Management has been hiring in domestic equities, and in global quantitative equities.
The shop has hired Daniel Peters as Australian Equities Analyst, focusing on listed property and infrastructure, reporting to Head of Australian Equities Martin Conlon. Peters worked previously in A-REIT-related roles at Phoenix Portfolios, Citigroup Asset Management, Mercer Investment Consulting, and Property Investment Research. Funds to which Peters will contribute research include Schroder Australian Equity S and Schroder Wholesale Australian Equity. Schroders is currently one of our six 'Highly Recommended' large-cap Australian equities strategies.
Schroders has also appointed Michael O'Brien as an Analyst in the Global Quantitative Equities team, whose 16 members are split between Sydney and London. O'Brien will report to Head of Research David Philpotts and contribute to the management of Schroder Global Active Value, Schroder Global Active Value Hedged, and Schroder Geared Global Active Value Hedged. This is an all-cap global share strategy whose largest weightings on the Style Box at 31 October 2008 were 35.48 percent large-cap value, 27.20 percent mid-cap value, and 12.08 percent small-cap value. The strategy currently has a Morningstar Recommendation of 'Recommended', and we described it in our most recent report as "a fine option to anchor the value portion of an investor's portfolio".