Taube Hodson Stonex
Equity Manager of the Year: Global
Equity Manager of the Year: Europe
Taube Hodson Stonex (THS Partners) achieved outperformance across both its European and international equity strategies in the year to March 31 2014, beating their benchmarks by 17.8% and 9.39% respectively.
The European Growth & Value Fund returned 31.26%, compared with 13.39% for the MSCI European Total Return Index. Meanwhile, the International Growth & Value Fund returned 17.84%, compared with the MSCI World Total Return Index’s 8.45%.
The firm attributes this success to its investment philosophy, which compares and contrasts equities on a global basis to identify high-quality stocks that are attractively valued and benefit from major secular themes.
THS says this strategy enables it to construct portfolios that can benefit from a range of regional, sectorial and macroeconomic drivers, generating longterm absolute and relative returns.
The firm’s stock selection approach differs from that of many other managers as it is willing to hold cash in portfolios if the portfolio management team thinks there are insufficient suitable stocks to invest in at the right valuation. It is unwilling to dilute the quality of its portfolios and therefore believes holding cash is preferable to investing in benchmark stocks that do not rate as favourably in terms of exposure to secular themes and might compromise long-term performance.
THS believes willingness to hold cash in portfolios creates a residual benefit by creating greater flexibility to take initial holdings in stocks that have passed its screening process without having to sell down other stakes. In addition to achieving strong returns, the manager also took steps to educate its existing and prospective client base on its portfolio construction, risk management processes and broader investment thinking.
It explained its investment process, which it calls its Adaptive Selection Process, by setting out in general terms how the firm generates investment ideas and tests these against the three criteria of theme, quality and value. THS says this move has enabled investors to understand more and ask the right questions by providing new infographics and presentation materials.
Another key development was the improvement of the firm’s client service, including the introduction of new analysis tools to give investors clear guidance as to how they expect portfolios to perform on a longer-term view in different market scenarios. THS believes its approach to environmental, sustainability and governance factors differentiates it from other managers.
The firm says it takes these factors very seriously, to the extent that it has developed its own rules and approach to ensuring the best possible practice.
Equity Manager of the Year: Emerging and Frontier Markets
Global alternative asset manager Duet Group saw great success across its African equity funds in 2013. The Duet Africa Opportunities Fund and Duet Africa Index Fund have both ranked among the top five Africa-focused funds in terms of performance, outperforming many of their peers, according to the firm.
The respective active and passive funds, managed by Africa investment expert Ayo Salami and focusing on sub-Saharan Africa and ex-South Africa, returned superior net returns of 30% and 36% respectively, says Duet. Salami and his team have been awarded a variety of accolades for their achievements in the management of African equities.
The firm was awarded Best Africa Fund of the Year at the Investor Choice Awards 2013, and Best Fund at the Africa Asset Management Performance Awards 2013.
Duet says Salami’s team owns and maintains one of the most comprehensive databases of African securities, with more than 20 years of daily trading information, such as volume and prices of more than 4,000 securities, as well as annual reports of hundreds of companies in digital format, including deceased companies that greatly reduce the impact of survival bias on the team’s analysis of African markets.
With more than 15 years of experience working within African securities, Duet says Salami continues to develop his strategy based on his knowledge of the region and high-conviction stock picking.
Multi-asset Manager of the Year: Global
PineBridge Investments’ dynamic asset-allocation strategy uses a forward-looking fundamental approach to allocating capital opportunistically. This strategy seeks to produce attractive absolute returns over an intermediate term, yet with lower volatility through a risk-focused methodology that helps to protect its portfolios during times of stress.
The firm’s Pension Composite – which has used this strategy for more than a decade – has been ranked in the top quartile on both one-year returns and one-year Sharpe ratio within the GTAA eVestment universe as of March 31 2014.
It is also among the top-ranked strategies on both returns and the Sharpe ratio over seven years, a period that captures the full downside stress of the global financial crisis followed by five years of upside.
Additionally, the strategy has been a consistently stronger performer over three-year and five-year periods. PineBridge Investments believes an intermediate-term perspective is necessary to allow time for market prices to converge to its fundamental views on asset classes and that this ability to benefit from market appreciation while positioning to protect portfolios during stress is central to investment excellence.
PineBridge says one of its key attributes is being inclusive and transparent with its key investors, inviting them to observe investment strategy meetings, access its intellectual capital and learn from its intermediate-term philosophy, which is designed to supplement investors’ existing long-term strategic and shorter-term tactical asset allocations and provide them with an avenue to pursue an outcome-oriented model through enhanced returns with lower volatility.
Baring Asset Management
Multi-asset Manager of the Year: Europe
The Baring Dynamic Asset Allocation Fund delivered a positive return to investors of 7.9% on a net basis in 2013, well ahead of its target of Libor +4%, accompanied by low volatility of returns.
Since inception in January 2007 the fund has returned 6.8%, just ahead of the investment objective of Libor +4% – which equates to 6.6% – and ahead of the 3% for the Ftse All Share Index and 4.8% for the Ftse All World Index.
The fund is also ranked first quartile over three and five years within its peer group, the Mercers Diversified Growth universe. Its multi-asset strategy is backed by a number of buy ratings from pension consultants.
The fund welcomed 69 new clients with £1.6bn ($2.7bn) of assets last year, while the daily priced Baring Multi Asset Fund doubled in size from £290m to £662m as a growing number of defined contribution schemes were looking for a multi-asset governance solution to select it as a default.
Together, this brought the amount Baring manages in sterling multi-asset approaches to more than £10bn for the first time. The Euro Dynamic Asset Allocation Fund was launched in March 2013, designed specifically for European investors to take into account the different correlations and currency considerations that these investors face.
Baring’s multi-asset investment strategy represents 30% of the firm’s assets under management. It follows a top-down approach to investing and is prepared to back its views with active positions in the portfolios it manages.
SRI Manager of the Year
As social investment evolves, impact investment has emerged as a viable strategy. To date, it has been associated with illiquid, higher-risk private investment – often equity-based – into ventures that have a direct outcome.
The challenge for asset managers has been to develop a credible and mainstream, dailypriced, investment product that can appeal to a broad investor base. Threadneedle believes its UK Social Bond Fund launched in December 2013 meets this challenge by providing a diversified bond portfolio that aims for positive social benefits and outcomes, as well as respectable risk-adjusted returns in line with traditional UK corporate bond portfolios.
The UK Social Bond Fund was launched in partnership with Big Issue Invest, which, in conjunction with Threadneedle, has developed a social assessment methodology that screens all investable bonds with a focus on the degree to which they deliver positive outcomes across eight fields of social development.
This provides the framework under which the social attributes and intensity of an investment are assessed for consideration alongside its yield and liquidity characteristics in building a balanced, diversified portfolio.
This is a key differentiator from many other products in the market that focus on one specific sector or a set of beliefs and values, which are applied to exclude certain types of bonds.
Threadneedle believes bonds have a number of advantages, including that a wide range of entities do not issue public equity but do issue bonds to finance projects and fund their objectives. It says the other benefit is that, unlike equities, bonds can be secured on identifiable assets such as property and can even target particular parts of a business, so that investors can link funding to a particular social outcome.
Fixed Income Manager of the Year: Global
Pioneer Investments’ team in Dublin manages over £40bn ($54.5bn) of client assets in investment-grade fixed income. All strategies exceeded their respective benchmarks in 2013, marking five consecutive years of outperformance, according to the firm.
Pioneer believes an absolute return bond strategy that aims to return pure alpha and neutralise any inherent market risk is necessary following changes in the approach to bond investing from clients, which are considering new ways of achieving their return requirement while remaining in the fixed income space. Despite the 2013 summer sell-off in fixed income markets, the team and strategy delivered returns of 0.35%, 0.74% and 0.31% in May, June and July respectively.
Sterling Absolute Return Bond was launched and has been available to UK clients since December 2013. The US fixed income team’s flagship fund, Pioneer Funds – Strategic Income, returned a relative 3.97% during 2013 and an absolute annualised return of 12.34% over five years. The team also delivered strong results in its well-established multi-sector credit strategy, bringing together a flexible approach to multiple credit pools.
Last year Pioneer launched two new multi-sector strategies, Global-Multi Sector and Dynamic Credit, in order to give clients the ability to diversify their portfolios and a potential buffer to volatility in bond markets as tapering begins.
Emerging markets fixed income continues to be an area of interest for many clients as they seek to diversify their portfolios and invest in long-term growth opportunities. This led Pioneer to launch two new strategies in 2013, the Emerging Markets Corporate Bond and Emerging Markets Corporate High Yield Bond.
Bluebay Asset Management
Fixed Income Manager of the Year: Europe
A key part of BlueBay Asset Management’s strategic business model is to take advantage of the strong secular growth trends within European corporate fixed income markets. This was an integral part of its strategy when the company was founded in 2001 and remains equally relevant in today’s market. BlueBay’s European fixed income business focuses on corporate and government debt.
It manages a total of 36 long-only and alternative funds with total assets under management of $62.6bn that invest in developed market and emerging market fixed income. This includes absolute return strategies as well as multi-asset credit funds. Assets under management within the multi-asset credit funds totals $1.3bn.
As the product suite of multi-asset credit has grown, BlueBay employed David Riley as head of credit strategy in July 2013. Joining from Fitch Ratings, he brought a wealth of knowledge and experience to strengthen the collaboration between BlueBay’s sovereign and corporate credit experts.
BlueBay has also created an institutional portfolio managers team to sit between the sales team and portfolio managers, to ensure that communication to clients is detailed, thorough and committed, while allowing managers to dedicate their time to running their funds.
Over the past few years, many European investors have become increasingly aware of environmental, social and corporate governance (ESG) issues.
In response, BlueBay investigated solutions to fulfil ESG requirements and with the help of an experienced consultant, ESG analysis has now been incorporated into the investment process and responsibility now sits with the investment team rather than a specialist team.
BlueBay is a signatory of the UN Principles for Responsible Investment and has an increasing number of segregated accounts utilising exclusion lists to meet their requirements.
Fixed Income Manager of the Year: Emerging & Frontier Markets
Stratton Street’s Renminbi Bond Fund has returned 87% since its launch in November 2007. The firm attributes the fund’s success to its strategy to invest in bonds from Asian creditors hedged into renminbi while many other funds invest solely in “dim sum” CNH renminbi bonds.
The fund has the flexibility to buy dim sum bonds but Stratton Street considers that they offer little value. This has enabled it to generate positive returns this calendar year at a time when the renminbi has had its first period of weakness, making up the returns with appreciation on the bond portfolio.
Stratton Street has launched a Luxembourg-based 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 secured its first pensionfund client this year, investing in the Wealthy Nations strategy, holding fixed income securities from creditor nations that are undervalued.
All Stratton Street’s funds use its net foreign asset modelling to invest in fixed income based on ability to pay rather than market weights. The fund considers that market size weighted investment for fixed income simply means buying more from the larger issuers of debt.
Wealth Manager of the Year
Barclays has been voted the best wealth management firm in the Global Investor/ISF Investment Excellence Awards for the second year in a row. Over the past year the firm has undertaken significant innovations to enhance the experience its clients receive.
Barclays says it was the first wealth manager to introduce an innovative voice recognition solution, Voice Biometrics, which matches the client’s stored voice print against their live call in real time. This is aimed at ensuring the flow of the call is not interrupted and dramatically reduces the authentication each client has to go through. Clients can now start discussing their issues immediately rather than having to remember obscure information or details they may have entered on an application form many years ago, according to Barclays. The firm found that 88% of clients were at least as satisfied with voice authentication compared to the previous security process.
Barclays has also introduced a Financial Personality Assessment that uses the science of
psychometrics to take into consideration the scientific and emotional aspects of decision-making. Barclays says that wealth managers have traditionally categorised their clients according to a “narrow set of criteria” and that risk tolerance tends to be the only dimension of client personality that is taken into consideration.
The firm also launched a high-net-worth client lifestyle platform, the Little Book of Wonders, to provide clients with a “money can’t buy” world of exclusive experiences and luxury brand partners. The platform now has 3130 active users. One notable experience was taking clients to Paris to enjoy a day with Italian designer Valentino. One client commented: “It truly was an amazing experience and the generosity of both Barclays and Valentino was unending.” Another client who was taken to dinner with English celebrity chef Marcus Wareing said: “What can I say but wow! I knew the food would be sublime but to have the amazing evening we had was beyond expectation.” On spending a father-and-son day with British gun-maker Holland & Holland, a client said: “I must have already recounted our trip to the factory 10 times this weekend.”
Last year Barclays continued the high growth it experienced in 2012. Income from its wealth and investment management business grew to £1.8m ($3.1bn) in 2013, driven by its high-net-worth businesses, notably in the Americas and Asia, where growth exceeded 20% from 2012 figures. Client assets grew a “healthy” 10% to £204.8bn, customer deposits increased 18% to £63.4bn and lending balances were up 8% to £23.1bn. Barclays says its joint venture with SMBC in Japan far exceeded its expectations reporting a full-year 2013 profit of £13m (2012: £1m). The firm says it cut the volume of customer complaints it received by 30% in 2013.
Barclays’ achievements have been recently recognised by other entities, including for net-worth specific services in the UK (Super Affluent) in the Euromoney Awards. The firm was also voted Customer Service Team of the Year in the CCA Awards, Best Application of Technology in the European Contact Centre and Customer Service Awards, and was recognised with the Corporate Social Responsibility of the Year prize at the HR Network Awards.
The business has also undergone a major restructuring following Barclays’ decision to roll it into the bank’s personal and corporate banking arm, alongside its UK and retail banking operations. Barclays’ chief executive Antony Jenkins said recently that this would create “powerful synergies both on the customer side and on the cost-reduction side.
Allianz Global Investors
Infrastructure Manager of the Year
Over the past year Allianz Global Investors (AllianzGI) has completed eight infrastructure debt transactions across seven European countries, including the funding of the A11 motorway in Belgium and the M8, M73 and M74 motorway improvements in Scotland.
AllianzGI’s investment in the Scottish Motorway Improvements Project included a number of important firsts for the UK infrastructure sector since the financial crisis:
- First UK listed project bond to feature a deferred settlement mechanism to mitigate negative carry.
- First use of an unwrapped construction phase project bond pari passu with an EIB loan.
- First such investment by a UK pension fund.
Pension funds and insurance companies are drawn to the long-term, secure cashflows that can be generated by infrastructure investments and used to pay their equally long-term liabilities.
In addition to the transactions completed, AllianzGI has a pipeline of investments either at the tender stage or close to completion.
The creation of infrastructure debt as an asset class offered by investment managers has been spoken about for a number of years but was held back by a lack of specialist expertise within the industry and the dominance of banks in the financing of such long-term projects.
The acquisition of expertise by large-scale players such as AllianzGI has provided the market with a credible source of long-term funding.
With the institutional offer still in its infancy, the ability of an investment manager to deliver bespoke debt offerings is critical to the credibility of the offering. Investment managers need to establish significant commitments before placing bids for what is often a detailed tender process.
Depending on the type of investment, the financing may be deferred or happen in a number of tranches. The earmarking of £50bn of infrastructure projects open to private investment in the recent Budget underlines the critical role that private capital is set to play in modernising the UK’s infrastructure.
Additional sources of investment can help ensure major infrastructure projects become a reality. As one of the first global investment managers to establish a dedicated infrastructure debt team, AllianzGI is playing a leading role in positioning infrastructure debt to institutional investors as an attractive, long-term asset class.