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Multi-Asset Manager of the Year
AQR, founded by former Goldman Sachs quant guru Cliff Asness in 1998, has been expanding its business in Europe steadily in the past few years. In the 12 months to the end of May its European assets went from $16.5 billion to $20.5 billion; its European team went from 18 to 22 and it had to move to larger premises. AQR, short for Applied Quantitative Research, combines the quant strategy known as risk-parity – investing across a range of assets according to how risky they are, rather than their expected returns – with managed futures and market-neutral strategies more common to the hedge fund world, to create its flagship Systematic Total Return strategy. This made 3% in US dollar terms in the 12 months to May 31, while the global equity market fell by 4% in that currency. In the three years to that date AQR made an average 9.5% a year, against 6.5% for the MSCI World Total Return index.
JP Morgan Asset Management
JP Morgan has enjoyed strong growth for its flagship multi-asset strategy, the Global Macro Opportunities Fund, in the past year – with assets swelling dramatically from $150 million to $5.6 billion in the 12 months to the end of May 2016. As the name suggests, its approach involves making calls on eight global macro themes – such as low inflation, policy divergence, or a gradual growth recovery in Europe – that drive investment decisions. Performance at the fund, which is co-managed by multi-asset chief investment officer James Elliot, has also been strong, with the fund making 9.1% a year, on average, during the three years to that date, in pounds sterling terms, compared to a return of 7.9% for the MSCI World Total Return index. That makes it one of the top-performing funds in its peer group. Institutional investors can buy it for 75 basis points. The fund sits within JP Morgan’s global multi-assets franchise, which grew from $160 billion to $173 billion in 2015.
Nordea Asset Management
Net inflows to Nordic fund manager Nordea’s flagship Stable Return multi-asset strategy in the past year have been nothing short of striking. The strategy attracted €6 billion during the 12 months ended May 31, helping Nordea become Europe’s top-selling fund manager this year, displacing giants like BlackRock and Natixis. The strategy, run by Asbjørn Trolle Hansen, Claus Vorm and Kurt Kongsted since launch in 2005, has a strong focus on preserving capital, identifying “return drivers” such as the extra premium available for low-risk equities, or interest-rate sensitivity in bonds; and allocating money to them based on how risky they are, rather than what returns are expected. Nevertheless, returns have been impressive; Stable Return has made an average 8.98% a year in sterling terms in the three years to May 31, putting it near the top of the performance tables.
Towers Watson Investment Management
The $5 billion investment management arm of Willis Towers Watson, which is one of the world’s largest investment consultancies, has put in an impressive performance for its flagship multi-asset strategy, the Partners investment fund. It has made 6.2% a year, in sterling terms, in the three years to May 31, a result that elevates it above many multi-asset and diversified growth fund managers. Unusually among the top-performers, it eschews macro investment calls and does not take tactical views on markets; its approach is to build a portfolio up of niche investment ideas – such as a $25 million investment in Japanese solar power in summer 2015 that has made a 59% return – with inspiration coming from Towers’ team of manager researchers. It is also happy to keep the fund relatively small – currently at £526 million. Paul Berriman, head of the business, told Financial News in May: “There is no pressure to grow the Partners fund”. It is available for 50 basis points plus a performance fee of 10% of profits over its target, plus fees paid to underlying managers – though Towers says it bargains these down.
William Blair, a privately-held investment banking group based in Chicago, manages $64 billion worldwide, $5.8 billion of which is for UK and European clients – a figure that has grown by 87% in the past three years. Its multi-asset division is run by Brian Singer and Tom Clarke, formerly of UBS Global Asset Management, who have been with the firm since 2011. Their Macro Allocation fund, launched that year for US investors, has $2.6 billion under management and has returned 5.77% a year, on average, since inception in November 2011 to the end of June 2016 – despite a more difficult time recently. In 2013 the firm launched a European offshoot, the Dynamic Diversified Allocation fund, which has made 5.98% a year, in sterling terms, in the three years to May 31. While small, with only $20 million under management, the fund has just passed its crucial three-year track record and consultants are interested, not least because of the fund’s unique investment approach. It deploys insights from Game Theory to analyse the powers and motivations of decision-makers, like politicians, central bankers and even populist movements, whose actions drive markets much more than once they did.