AMP Capital’s global chief investment officer of equities, David Allen, has said the firm is fully-focused on its growth phase, as he completes a three-year process to revamp the firm’s equity division, with fund launches possible in the future.
Allen was hired in March 2016 and was tasked with setting up the firm’s global equity strategy as well as restructuring its other equity divisions.
It was now structured as Australian equities, global equities, global real estate and global infrastructure, with the Asian equity business having been closed. The Australian equity division also underwent ‘substantial change’ with 70% of the team being turned over.
Allen was fussy about the people he wanted to hire, saying the right culture and investment beliefs were more important than hiring a ‘star manager’.
“Since I took over, I have shut down the Asian equities division as I didn’t have high conviction in it, I have invested in the global equities capability, built a team which has launched several funds and lastly, I restructured the Australian equities range as I found clients wanted either a low-cost offering or a high-alpha solution,” he said.
“Getting the right people is essential, half of the team have been new in the last 3.5 years and we have made substantial changes to teams. We speak of star teams rather than star managers and there is less ego here.
“Our global equity team, for example, is only five people, they are all involved in the investment decisions and I expect we would only hire one more person for that team in the next five years.”
The concentrated AMP Capital Global Companies long-only fund, which only holds between 25-30 stocks, was launched in March 2017 and has since been replicated for clients in Europe, Asia and New Zealand.
“The focus of the fund is on companies where we have a high degree of confidence, those ones which are positioned competitively and have room to grow their cashflow earnings,” Allen said.
“We like areas such as medical devices, consumer discretionary and technology while avoiding those areas which are too cyclical like banks and miners.”
The newly-launched global equities division was currently running as unprofitable while the restructure was happening, which Allen said was a ‘tough decision’ to take but he was confident it would see a 20% growth rate per annum in the future.
“Over the next five to 10 years, I will be disappointed if we aren’t growing at 20% per annum in annual growth [across the four divisions],” he said.
“A lot of businesses have enormous operating leverage but we could operate with 2/3x this volume of assets with the same number of people.
“We expected it would take five years to be profitable, we are three years in and our expectations are still the same.
“Our performance has been strong, we are ahead of objectives, our teams are strong and we are poised for the growth phase which we expect to lead to asset growth. I am positive for the future.”
This could include future fund launches with Allen speculating areas of interest for the firm were a long/short offering.
“We will only compete where we have an advantage, over time we may consider variants such as a long/short offering with lower market exposure, that could be interesting.”
