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Asset Manager of the Year
The £130 billion Scottish fund manager has had an exceptional few years. Assets under management are up by more than two thirds since 2011, when it managed £72 billion, and the firm’s growth-oriented equities strategies are still to be found at or near the top of three and five-year performance tables – though one-year numbers are more challenged. In the three years to May 31, its Long Term Global Growth strategy is ranked second out of more than 250 global equity funds in FE Analytics’ tables, with returns of 14.36% a year on average; its Global Discovery fund is 15th and its International fund, 43rd. The firm is anything but a benchmark-hugger. In 2015, it said the active share of some of its strategies stretched as high as 99%. Baillie Gifford’s diversified growth fund is the top pick of pension funds within the UK’s local-authority sector, with more than £1 billion invested.
Speaking to analysts in early July, BlackRock chief executive Larry Fink said that investors are today facing “unprecedented challenges”. Results at the $4.9 trillion firm he leads have reflected that in 2016, with net outflows from active strategies this year, but in the past 12 months the firm has pulled in a net $126 billion, with inflows particularly strong in its ETF division iShares. As of March 31 2016, 58% of the firm’s equity assets are ahead of benchmark over three years, though this rises to 64% over one year as performance recovers from a dicey patch in its US equity funds. Performance and growth at its $13.3 billion emerging-market debt division, however, has stood out in difficult times. In the past year, the firm has developed interesting smart-beta ideas in both equity and fixed income, and launched a new “buy and maintain” UK corporate-bond pooled fund.
Insight, with £440 billion under management, says it is the third-largest manager of UK pension funds, and the fastest-growing. In 2016 it was the top-rated manager of both liability-driven investment and fixed income strategies by UK investment consultants, according to Greenwich Associates. 100% of the firm’s multi-asset, absolute return and cash funds are ahead of benchmark over the three years to March 31, and 90% of its fixed-income funds. The firm continues to push the envelope in LDI and related areas; it has reached an agreement with clearing house LCH to provide liquidity for bond repos for its clients; and it is soon to launch a groundbreaking new Government Liquidity Fund, a cash fund-like strategy that allows pension funds to lend to other pension funds in order to meet both groups’ liquidity and LDI requirements; cutting out the banking middleman.
Schroders has spent the past year positioning itself for future growth with a steady stream of astute bolt-on deals and product launches. In May, it acquired a $4 billion asset-backed securities business from Brookfield Asset Management to diversify and grow in fixed income. It wants to do the same in alternatives, and so launched a new infrastructure debt arm in December, and in April, a tie-up with Dutch direct-lending firm NEOS Business Finance. It wants to expand in the US, and so it signed a distribution deal with US wealth manager Hartford Funds, also in April. It is eyeing future opportunties in insurance and pensions buyouts, and so took a 12.5% stake in Bermudian reinsurer Safe Harbor, also the same month. In its core businesses, it has launched new offerings in multi-asset credit, property and a new UK onshore version of its popular Global Recovery fund; as well as attracting top talent such as Shigesuke Kashiwagi, former group chief financial officer at Nomura, who joined as country head in Japan in July.
Standard Life Investments
Best known as the manager of the UK’s top multi-asset fund, Gars, Standard Life Investments runs a total £253 billion, a little more than half of which is managed for clients other than its parent group. During 2015, external client assets went from 48% of the total to 52%, with £12.6 billion of net inflows. In the three years to the end of 2015, 95% of its external funds were ahead of benchmark. Gars has suffered a performance wobble in recent quarters, but the firm’s global equities strategy is up by 22.1% in the three years to May 31, compared to 18.9% for its benchmark, and the global bonds strategy is ahead of the index by 0.7 percentage points over three years. As its 2014 acquisition of Ignis beds down, the firm is pushing into LDI with a suite of new Integrated Liability Plus Solutions, launched in April and already rated by five consultants; and it is targeting growth in private markets as well. The firm has brought together its private credit, property, infrastructure and private-equity teams into a “one-stop shop” and begun pitching for combined alternatives mandates. Its total return credit strategy, launched a little more than a year ago, has positive ratings from consultants. With strong governance credentials, the firm also campaigned for the end of quarterly reporting – a campaign that has begun to bear fruit this year, with several blue-chip companies ending the practice in the name of long-termism.