Rob Harris, CEO and co-founder of Majedie Asset Management
CEO of the Year
Under the leadership of CEO Rob Harris, Majedie Asset Management has increased its assets under management (AuM) by around 40% to £9.8bn ($16.7bn) during the 12 months to the end of April 2014.
During that period the firm says its funds produced indexbeating returns, most notably the UK Income Fund, which returned 25%. At the same time, Majedie says its operating profits have more than doubled year-on-year, driven by AuM growth, strong investment performance and tight cost management.
One of five founding members of Majedie, Harris has worked to align the firm’s interests with those of its clients by successfully negotiating the purchase of shares from Majedie Investments, which backed the 2002 creation of the asset management company.
The move in 2013 resulted in 82% of Majedie’s shares being owned by employees, which is expected to increase in due course.
Originally the major shareholder, Majedie Investments agreed to sell some of its shares as the firm’s profit milestones were reached. Another achievement for Harris was the outcome of an intensive recruitment process to enhance the company’s investment team over the 12-month period.
He hired fund managers Richard Staveley – to strengthen Majedie’s small-cap expertise – and Tom Record to lead the development of the firm’s long-only global equity product. According to the firm, Harris’ involvement in the hiring process in its operations, legal and client service teams has enabled the fund management team to be undistracted so it can focus on its core activity of making money for clients.
The firms says it has seen continued growth in profits, driven primarily by its rolling threeyear fund performance numbers, strong alignment with client targets, investment in training and infrastructure and a “well-capitalised balance sheet”.
Operating profits have also more than doubled year-on-year, which Majedie attributes to AuM growth, strong investment performance and tight cost management. Majedie says that Harris has kept the company loyal to its founding principle of limiting the capacity of its funds.
Asset Manager of the Year (AuM more than $25bn)
Insight Investment almost doubled its AuM following a hugely successful year Insight Investment had an astounding 12 months, growing its assets under management (AuM) by 44% to £295bn ($501bn) in the year ending March 31 2014.
The firm also delivered high performance over the year to the end of February 2014 across 100% of its multi-asset funds, cash funds and funds in the Absolute Insight range. It also says that 93% of its fixed income portfolios and full discretion LDI mandates outperformed their benchmarks.
One of the firm’s highlights was to help facilitate the UK’s largest pensions buy-out when the EMI group pension scheme concluded a de-risking deal with Pension Insurance Corporation in July last year. Insight acted as the pension trustee’s liability-driven investment (LDI) manager, helping to manage market risks and complex operational, counterparty and legal risk.
Insight has introduced a range of new investment solutions including real assets and alternative credit products. For example, the manager spotted an opportunity for institutional investors to enter the commercial real estate loan market on extremely beneficial terms due to bank deleveraging in Europe.
It also offered its buy-and maintain-credit product on a pooled-fund basis, drawing in £900m in assets over an eightmonth period. Insight believes that the buy-and-maintain strategy offers investors access to better beta than indexation and employs the in-depth credit analysis resources used when managing fully-active portfolios.
The firm argues that indexation forces managers to act in counterintuitive ways, such as buying more bonds from an issuer as they become more indebted. Insight continued to be at the forefront of client advocacy over the past year.
It played a key role in gaining pension funds a three-year exemption from the requirement to centrally clear OTC derivatives and is now lobbying to ensure the impact of the new regulations will be manageable when they come into effect.
Sage Advisory Services
Asset Manager of the Year (AuM less than $25bn)
Sage Advisory Services has had a successful year, becoming advisor and asset manager for $10bn of assets at the end of March 2014. Headquartered in Austin, Texas, the independent firm provides US institutional and private clients with traditional fixed income asset management, a variety of global tactical exchange traded fund (ETF) strategies and asset/liability analytical services.
The firm built on its ETF expertise in January this year with the launch of the Sage Core Reserves ETF (Hold), an actively-managed ultra-low duration fixed income vehicle structured by AdvisorShares with a goal of preserving capital while providing income.
The ETF is designed to deliver strong returns to investors while mitigating duration risk, which is a concern for many due to the US Federal Reserve’s tapering of government bond purchases. Sage has used ETFs for institutional clients since 1998 and was among the first institutional asset management firms to launch an exclusively-ETF investment strategy in 2002.
The firm has built its investment and research process on forward-looking tactical management of large market segment decisions, which it believes has the biggest impact on portfolio performance and risk management. As the drought crisis in California worsened, Sage’s president and chief investment officer Robert Smith prepared for the impact of the drought on municipal investments in the state – and warned the market.
The firm made two senior appointments last year. John Slais was promoted from vice president of finance and compliance to chief financial officer and chief compliance officer, while the firm hired former Madison Scottsdale president Jeffrey Sims to lead its insurance-related business development activities as director of insurance investment management services.
Sage says it is dedicated to developing “purpose-based investments”, a philosophy it has held ever since the firm was founded in 1996. With a foundation built upon the principles of simplicity, liquidity and transparency, the firm says it continuously evaluates investments to anticipate potential pitfalls and steer clients toward better decisions.
Sage said it strives to maintain the culture and accessibility of a small business while delivering high-quality institutional services and investment management.
Asset Manager of the Year: Europe (AuM more than $25bn)
Kames Capital experienced strong performance in its fixed income strategies in 2013. For the second consecutive year 100% of its principal fixed income strategies for institutional investors met or exceeded their performance benchmarks. The firm’s longer-term performance record was equally as good, where 100% of these strategies also outperformed their benchmarks over three years, five years and since inception.
Although many investors reduced their allocations to bonds, the firm said it managed to maintain existing assets in its fixed income funds. Kames Capital’s flagship global equity strategy for institutional investors also did well, having delivered 22.19% in 2013 compared with a benchmark return of 21.14%.
Since inception in January 2011, the strategy has returned 12.27% per annum compared with a benchmark return of 8.27%. The firm said it benefited from the rotation into equities by investors, acheiving significant growth in its Global Equity Income Fund.
Following the strengthening of its property investment team over the past three years, Kames Capital had a breakthrough year in institutional property mandates. In October 2013 Kames launched its closed-ended Active Value Property Fund following commitments of £115m ($196m) from institutional investors, including the West Midlands Pension Fund.
It has since secured additional commitments of at least £65m from pension funds for a second close to the fund this year. The Kelda Group Pension Plan appointed Kames Capital in April last year to manage an £85m indirect property mandate, which was the first major mandate win for Kames’ indirect property team.
Kames Capital won an indirect property mandate from the Coca-Cola Enterprises Pension Scheme, which involved the £750m scheme transferring its £32m indirect property portfolio to Kames in July 2013. During 2013 Kames Capital achieved record new business across all channels of £3.29m, an increase of 20.3% from the £2.7m reached in 2012. Both its UK-domiciled Oeic range for UK retail investors and Dublin-domiciled Oeic range, primarily for European investors, experienc
ed strong growth in assets. Its largest institutional success last year was being chosen by a major European central bank to manage a £350m corporate bond portfolio.
The firm further developed its European business in 2013 by expanding into the Austrian, German and Spanish markets, while adding two dedicated relationship managers to cover the Austria and Germany. In May 2013 it created dedicated local language websites for the European markets in which it distributes products.
Majedie Asset Management
Asset Manager of the Year: Europe (AuM less than $25bn)
Majedie Asset Management’s funds outperformed their assigned benchmark in the 12 months to April 2014. The asset manager’s UK Equity Fund returned 20% net of fees, 9.5% ahead of the Ftse All-Share Index. Its UK Focus Fund returned 24.0%, 13.5% ahead of its index.
Its UK Income Fund beat the index by 14.5% with returns of 25%, while the Tortoise Fund returned 15%. Majedie’s UK Income Fund, launched in January 2013, increased assets from £12.9m ($21.9) in April 2013 to £544.8m in April this year and is up 50% net of fees since its inception in December 2011.
The firm believes in limiting the capacity of all its funds to retain a liquidity advantage, with the aim of yielding greater returns for its clients. The UK Equity and Focus Funds have therefore continued to see their capacity managed, with any outflows recycled into existing client mandate extensions or, occasionally, new client mandates.
After reopening in late 2013 following the adoption of a fully global mandate, the Tortoise Fund assets under management increased from £494m at the end of September 2013 to modestly above the £900m capacity level that Majedie had anticipated. Despite Majedie’s strong performance track record, it says it continues to have the “healthy paranoia” about generating performance that it had when it was established in 2002.
The firm says it will continue to reinforce the building blocks to sustainable, long-term outperformance, expand depth and breadth of its research capability and remain committed to its promise to limit capacity.
Last year Majedie strengthened its in-house research effort with the further development of MajWiki, a system that allows Majedie analysts to store and retrieve ad-hoc unstructured information and company comments, and MajNumbers, a proprietary research tool designed to provide deep fundamental research, unbiased stock information, analysis and valuation.
The firm has also strengthened its investment team, hiring Richard Staveley to partner Adam Parker in running the small-cap portion of the UK Equity Fund, as well as hiring Tom Record to lead the development of its global long-only product.
Asset Manager of the Year: Emerging and Frontier Markets (AuM more than $25bn)
Long-standing emerging markets (EM) manager Ashmore continued to reinforce its reputation for strong performance over the past year across its equity strategies. Its Middle East Equity strategy was the greatest success, returning 56.2% gross compared with 29.9% for its benchmark.
The Sicav EM Frontier Equity Fund followed suit with 41.2% gross against its 25.9% benchmark, followed by its Frontier Africa strategy that reached 27.2 gross compared with the benchmark’s 24.5%. Ashmore’s Sicav EM Global Small Cap Equity Fund also did well, with 11.5% gross versus 1.0% for the benchmark, while the Ashmore Sicav EM Global Equity Fund returned 1.2% gross compared with the benchmark’s –2.6%.
The firm recently made history by becoming the first investment manager outside Hong Kong to be granted RMB Qualified Foreign Institutional Investor status, which will enable it to offer clients a compelling way to access the onshore Chinese fixed income markets.
The 22-year-old firm continued to build out its Luxembourg Sicav fund range, launching an EM Local Currency (Broad) Debt fund that allows greater flexibility to invest across the fixed income spectrum in pursuit of enhanced returns, an EM High Yield Corporate Debt fund and a dedicated Brazil Debt Fund.
The firm has also launched a number of dedicated EM equity funds to broaden its offering in this area, notably the Sicav Turkish Equity Fund, Sicav Pan Africa Equity Fund, Sicav Latin American Equity Fund and the US Frontier Equity Fund.
Ashmore clearly remains committed to EM funds, which it has managed since 1992 when it launched its first flagship fund, the Ashmore Emerging Markets Liquid Investment Portfolio, which has since provided investors with gross annualised returns of 19.81%.
The firm manages assets across various EM investment themes, most notably blended debt, local currency and external debt. It says it will continue to provide its investors such as pension funds with longer-term investment opportunities in order to lock-in potentially outsized gains over the medium to long-term. Pension funds accounted for around 32% of the firm’s global assets under management at the end of 2013.
Asset Manager of the Year: Emerging and Frontier Markets (AuM less than $25bn)
Stratton Street has had yet another successful year, following its success in the Asia Pacific fixed income manager award category in 2013. Its Guernsey-domiciled Renminbi Bond Fund continued to perform well and has now returned 87% since its launch more than five years ago.
From August 2011, when there were a number of comparable funds, to the end of April this year, the return on the fund was 25%, while most other funds returned far less. While many funds invest solely in “dim sum” renminbi bonds, Stratton Street’s invests in bonds from Asian creditors hedged into renminbi.
The firm believes dim sum bonds offer little value and that it is a small and illiquid market. The manager’s strategy has enabled it to have positive returns this calendar year even when the renminbi had its first period of weakness, making up the returns with appreciation on the bond portfolio. However, the firm thinks at some point the large onshore Chinese bond market will open up and be available for the fund to invest in.
Last October Stratton Street launched a Luxembourgbased Ucits version of the fund, the Stratton Street Ucits Renminbi Bond Fund UI, giving investors unable to access the original Guernsey fund access to the strategy.
The company also took on its first pension fund client this year, which invested in the long-standing Wealthy Nations strategy, which contains holdings of fixed income securities from creditor nations it deems undervalued. Stratton Street believes that fixed income investment is based on ability to pay and relative value.
It says this is important as a successful investment pays a small spread while an unsuccessful one loses everything. All its funds use net foreign asset modelling to invest in fixed income based on ability to pay, not on market weights. The firm believes market size-weighted investment for fixed income simply means buying more from the larger issuers of debt, which may well be unable to pay it back.
Therefore the fund avoids investing in heavily-indebted nations. Stratton Street also bases its products on long-term view of investment trends. For example, Stratton Street realised China was on the way to becoming more important in the investment world when it launched its Renminbi Bond Fund in 2007 at a time when investors could not invest in renminbi through other funds.
Ayo Salami, CIO of Duet Group
CIO of the Year
Duet Group’s Africa-focused funds, is one of the best-known fund managers in Africa and has a high profile in the regional and international press. He was one of the leading speakers at an Africa forum hosted by Cass Business School in London earlier this year and has received plaudits and awards for his success over the past two years.
Both of the active and passive funds he manages have ranked among the top five Africa funds, according to Duet. The Duet Arica Opportunities fund, which actively invests in African equities, had net returns of 30% last year, while the Duet Africa Index, which invests passively in African equities, returned 36%.
Salami manages more than $470m in total across the two funds. The firm says that his “unique” investment strategy has increasingly attracted investment from prominent institutions in Northern Europe, North America and Africa.
His strategy is to find compelling return ideas, often looking beyond large-cap stocks to second- tier companies that may be overlooked, reaping the benefits once these firms grow and gain greater recognition, coverage and flow from large emerging market, frontier and passive global equity vehicles.
With more than 15 years of experience in African securities, Salami has spent the past seven years educating institutional investors on why they should invest in Africa and how best to gain experience to Africa’s growth.
His philosophy is the more that people know about Africa’s potential, the better the landscape will be for both investors as well as for the development of Africa.
Duet says that Salami’s passion for investing in the region has been paramount to the success of the firm’s African equity business.
CEO, CIO and asset managers of the year
Rob Harris, CEO and co-founder of Majedie Asset Management
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