US-based global equities manager Batterymarch expects to grow Legg Mason’s global equities portfolio to $1 billion within the next 18 months.
After taking over from Citigroup as Legg Mason’s global equities manager in February last year, the portfolio has now begun to gain traction within the Australian market, where Batterymarch has used Legg Mason’s distribution networks to grow funds under management to $160 million in the past 14 months.
Kimon Kouryialas, Legg Mason director and head of distribution, said that it was the best fit because of its quantitative, style-neutral model.
Batterymarch’s director of global equities Mike McElroy and global marketing manager Daniel Kelly have been in Australia this week speaking with clients, and commented on the strong interest in quantitative analysis they have witnessed, suggesting there may be a cultural reason for the popularity of quantitative stock analysis in some countries.
Both said they had also been overwhelmed by the interest in 130/30 strategies, whereby fund managers take a 130 per cent long and 30 per cent short position in stocks in order to provide upside and downside returns, and Kouryialas believes we will see a lot more of this within Australia as funds scramble for new sources of alpha.
While Legg Mason does not regard itself as a heavyweight within the retail space, it is shifting further resources into the retail space, listing on the major platforms, but also remains committed to institutional investment.
Kouryialas said it is not seeking to compete with the leading retail platform providers, but is targeting the leading platform providers for its retail distribution: “We try to get product on their shelf space,” he said, naming van Eyk, Standard & Poor’s, Colonial, BT Wrap, MLC, IOOF and Navigator as some of the platforms it targets.
He expects Legg Mason will have little trouble achieving $1 billion in global equities over the next 18 months: “In the institutional space, you only need a couple of mandates to achieve this. We should be able to achieve that target, but we recognise you’re only as good as your returns”.
