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Asset Manager of the Year: Below £100 Billion
Henderson Global Investors
Under the leadership of Andrew Formica, Henderson has steadily gone about building its business overseas. In 2015 the firm completed a trio of acquisitive moves in Australia, adding to its 2014 takeover of US equity manager Geneva Capital Management. Also in 2015, the addition of the former chief executive of Macquarie’s investment banking operations in Asia, Kalpana Desai, was Henderson’s first director to be based in the region. The move was described by Formica, chief executive since 2008, as a “statement of our plan to globalise”. These moves are translating into tangible change on the firm’s client base with 50% of its assets now managed on behalf of clients outside the UK. Formica’s vision for the firm is for its brand to be viewed in a similar fashion to that of British technology company Dyson, as a badge of quality for its investment funds. Some 77% of Henderson’s funds had outperformed their respective benchmarks over three years to the end of June, although this was down on 83% for the same period a year earlier. Total assets managed by the firm have however increased by 50% since 2013 from £63.7 billion £95 billion.
Hermes Investment Management
Hermes is a fund manager with a conscience. But fortunately it is also able to back up its good intentions with robust performance. In the three-year period to December 31, 2015, 100% of its strategies outperformed their benchmarks, a marked improvement on 80% posted over three years to the end of 2014. Performance in the 12 months to the end of March for its flagship equity and fixed income composites has also been impressive. Its £2.7 billion Sourcecap European Alpha strategy outperformed its FTSE All World Europe benchmark by 4.75% in the period, while its £1.8 billion Emerging Markets Asia strategy also beat its MSCI AC Asia ex-Japan benchmark by 13.19% in the period. In fixed income its £230.9 million Hermes Global High Yield Bonds composite outperformed its benchmark by 0.84% in the 12 months. In October 2015 the £24.1 billion unveiled a company pledge to always put its clients first, as well as to act responsibly and transparently. Also in late 2015 it created a centralised client hub in order to boost its client service and relationship management. Although its owners, the BT Pension Scheme, opted to shift an £8.4 billion gilt mandate from Hermes in December 2015, the fund manager has been looking to decrease its dependence on the pension scheme for which it services 300,000 members. Its third-party revenues accounted for 52% of its total in 2015, up from 41% the year before and 18% at the end of 2011.
Intech Investment Management
Understanding Intech’s systematically-managed relative and absolute risk equity strategies is a hard task for many. But recognising that the bulk of its funds have outperformed their benchmarks is a much simpler ask. In contrast to the majority of managers Intech views volatility as a source of potential investment reward, as opposed to risk. And the firm constructs its funds accordingly. Its flagship $12 billion US Enhanced Plus fund, which has been running for almost 30 years, has been a model of investment consistency, outperforming its S&P 500 Index benchmark by 0.59%, 1.34%, 0.55% and 0.61% over one, three, five and 10 years on an annualised basis. Since its 1987 inception the fund has outperformed by 1.38%. The Denver-based firm, a subsidiary of Janus Capital Group, managed about $49.1 billion as of June, 30 2016. Since being set up in 1987 the firm has continued to expand its fund range, in particular, in recent years. Its $1.1 billion US Low Volatility fund, set up in 2012, outperformed its MSCI World Index benchmark by 13.93% in the 12 months to June 30. It has also outperformed by 4.39% on an annualised basis in the past three years. In essence, the firm’s funds are constructed according to a mathematical formula which aims to profit from the relative volatility between stocks, buying them when they fall and selling them as they rise.
Newton Investment Management
Newton, the £51.8 billion London-based subsidiary of BNY Mellon, has recorded strong performance across its core investment specialisms in the past 12 months. Returns posted for its £23 billion worth of equity strategies in particular have been impressive, with its £6.4 billion Newton Global Income Fund returning 12.7% in the 12 months to May 31, compared to its benchmark producing 0.6%. In multi-asset, its £13 billion Newton Real Return strategy played a Brexit blinder with its performance for the 12 months to the end of June producing a return of 9.8%, compared to its Libor+4% benchmark of 4.5%. For the year until the end of May the fund had been up 1.9%. In fixed income, its £1.6 billion Newton Global Dynamic Bond fund has returned 3.3% over one and three years to the end of June, compared to its benchmark which delivered 2.6% and 2.5%. Its relatively nascent emerging markets strategy, launched in 2011, is also up 4% in the past five years, compared to its benchmark which is down by 2.1%. Newton, which has been headed by Helena Morrissey since 2001, also places substantial emphasis on its responsible investment team, which directly feeds into the investment process across its equity and fixed-income assets. The departure of the firm’s chief investment officer Simon Pryke in June 2015 prompted Morrissey to become more involved with the day-to-day oversight of its investment team, while Charles French stepped up to become head of investments.
Royal London Asset Management
Royal London Asset Management has made significant strides in broadening its asset bench and institutional appeal in the past two years. Out of the firm’s £87.9 billion in assets, roughly £17.23 billion is managed on behalf of institutional investors. This proportion was boosted during the first quarter of 2016 with roughly £600 million of institutional inflows into new mandates, the majority of which were for RLAM’s buy-and-hold maintain credit funds. The firm, which was set up in 1988 and is a subsidiary of Royal London, is also looking to muscle in on the increasingly popular multi-asset space with the launch of six multi-asset portfolios in March, each with a different return and risk profile. These are managed by Trevor Greetham, previously director of asset allocation at Fidelity International, who joined in January 2015. In August 2015 the firm also hired John Burke from Newton Investment Management as its head of institutional and followed this up in February 2016 with Phil Reid joining as its head of wholesale from HSBC Global Asset Management. The firm also added to its UK equity team with the hire of Richard Marwood from Axa Investment Managers in April. The firm’s £1.7 billion UK Equity Income Fund has returned 8% and 10.71% over three and five years compared to its FTSE All Share Index benchmark of 3.11% and 5.58%.