Unique process delivers the goods
Tactical asset allocation is essential in constructing portfolios that perform well - and the process in use at Legg Mason Asset Management Australia is one of the more transparent and simple processes in the market, according to Lonsec Research.
The combination of a highly regarded investment team, a robust investment process and the breadth of asset classes from which investments are drawn led to Legg Mason being the winner in the Asset Allocator of the Year category in this year's Money Management/Lonsec Fund Manager of the Year awards.
Legg Mason Australian Equities chief investment officer Reece Birtles said the investment teams and process at Legg Mason was unique since the company used only analysts, researchers and managers within the Legg Mason stable.
“These are not accessible to people outside Legg Mason but are all accountable because they all wear the same reputation and brand across the 31 countries we operate in, resulting in both innovation within the funds as well as being able to consider investment circumstances around the world,” he said.
Perpetual has continued its success of recent years, coming in as a finalist in this category for the third consecutive year. Perpetual head of diversified strategies Michael Blayney attributes the ongoing success to being contrarian.
“We ignore market noise to avoid consensus and taking on benchmark positions; and also ignore investment outlooks. We have considered valuations as the key input in our asset allocation. We see underlying valuations as being a good determinant of future returns if you have enough patience,” he said.
The use of a quantitative process for setting its tactical asset allocation allowed Perpetual to have wider investment diversity in more robust portfolios in order to manage different outcomes, Blayney said.
“We have focused on real returns and avoided the dominance of equities. When they are cheap we will buy them, but we want to manage the downside risk and avoid the path of traditional portfolios, which are often over-exposed to equities and their risk.”
Also coming in as a finalist is UBS Global Asset Management Australia, which has been communicating its multi-manager capabilities to clients over the past 12 months, emphasising its 20 years as an offshore multi-manager operating in Australia.
“The history of UBS is that of a multi-manager who has global expertise. However people in other markets see the world differently; and so we bring those points of view together in quarterly forums to look at scenarios and choose those that are most likely, as well as those that are most pessimistic and optimistic,” head of UBS Global Asset Management Australasia Ben Heap said.
According to Heap, these views are used for guiding the investment process and shaping tactical asset allocations, with the process being successful in bringing good investment ideas and returns to bear.
“We have found this to be a disciplined and proven process that is underpinned by considering the underlying valuations of the investments we choose, and we are confident it works because it is a global process used by 90 professionals around the world.”
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