It's fund managers' time to shine

Winner

Macquarie Investment Management

Finalists

BT Investment Management
MLC Investments Limited

Markets may have been volatile in 2016 but it is during these challenging times that fund managers can shine and demonstrate their value.

Macquarie Investment Management (MIM) believes this, and adopting a long-term, consistent approach, has seen them snatch the prestigious title of Money Management/Lonsec's Fund Manager of the Year, 2016.

Regional head of MIM, Brett Lewthwaite, attributed the firm's success to the equity team's ability to take advantage of the shift in China's reliance away from commodities and into consumer-based demand. 

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"It has really been about sitting with the investment team and talking about what clients want, and asking ourselves how we can do that consistently," he said of the firm, which has $377 billion in funds under management.

"Our philosophy tends to be having conviction in our holdings, our people, our processes, and ultimately I think that builds a lot of credibility and trust with clients."

He said he was proud the Macquarie series range, which offered innovation through managers like Arrowstreet, and IFP Global Franchise Fund.

"These are things that normal investors generally don't get that much access to and we've been able to bring those managers to market here under the broader brand. That suite generally has got something for everyone," Lewthwaite said.

The Lonsec research team, which deemed MIM as the top performer, said it had "built a strong level of qualitative conviction across a suite of Macquarie products and has been pleased that solid performance has followed".

MIM clinched the title from the other two finalists, BT Investment Management and MLC Investments Limited. 

BTIM chief executive, Emilio Gonzalez, acknowledged it was a tough year for markets but said the firm had stuck to its guns, continued to follow its process, and relied on its research to identify opportunities when constructing portfolios.

"Every year, I often say to people you can pick up the paper every day and there would be a reason why not to invest, but often that's not an option. We've been asked to invest people's money and the last 12 months has been no exception," Gonzalez said, adding that the firm allows investment autonomy to its staff.

He also attributed the firm's success to a stable team, and said it had not lost an investment manager or an analyst to a competitor in the last five to six years. 

A consistent focus on managing risk even when the benefits of risk management are not always apparent saw MLC Investments named as the other finalist. 

Head of investments, Dr Susan Gosling said when asset prices were driven more by investor psychology than economic fundamentals it became even more vital for fund managers to maintain objectivity. 

"Genuine insight requires that we remain sceptical, that we focus on understanding the different possibilities, always seeking to uncover what remains to be known," she said.

FINDING THE 2016 FUND MANAGER OF THE YEAR 

THE process Lonsec implemented to select the winners for each award category is consistent with last year's process and consisted of three primary components. 

Firstly, as an initial screen, fund managers needed to be rated 'recommended' or higher by Lonsec in their category. Lonsec's managed funds research process is qualitatively skewed. 

Lonsec believes that managing money is a combination of art and science, and that there are a number of critical ingredients that combine to produce a quality investment product. Lonsec's assessment of people and the investment process they employ has the greatest impact on its rating process. 

From this screened universe, Lonsec utilised two equally weighted components to select the Fund Manager of the Year winners in each category. 

The first component was the one-year excess return for representative funds for the calendar year 2015. 

Since the majority of retail flows are invested in wholesale trusts via platforms, wholesale trusts were used as the vehicles for performance calculation for managers.  

The second component was a qualitative analyst 'momentum' score, which the Lonsec research team determined for fund managers in each category. Factors that were considered in this momentum score included process enhancements, team stability and depth, management of funds under management (FUM) capacity and risk management. 

The highest scoring fund manager, from the aggregate of these two equally weighted components, was declared the winner in each category. 

In summary, managers who have performed well against the benchmark within their category and have strong positive qualitative momentum, as assessed by Lonsec, are finalists for these awards. 

In regard to the overall Fund Manager of the Year award, Lonsec used a voting process involving the Lonsec research team.  

Firstly, nominations were made for managers. Secondly, nominated managers were then ranked by senior members of the Lonsec research team. The highest ranking manager was declared the winner.