A disciplined and focused strategy in the retail market is just one reason Lonsec has crowned Schroders Investment Management the 2009 Money Management/Lonsec Fund Manager of the Year.
“Whilst Australian equities and fixed interest have been the stand-out capabilities for Schroders in 2008, Lonsec also has high regard for the firm’s global equity investment professionals and research process,” the research house said.
Lonsec also said it was pleased with Schroders’ efforts in terms of manager transparency, which is critically important for investor confidence. Schroders’ research and development effort was also viewed favourably.
There is no mistaking the success of Schroders in a very difficult year. Lonsec not only anointed it the overall Fund Manager of the Year, the firm also took out two other categories, winning in the Australian Equities (Small Cap) and Fixed Interest (Diversified) categories. In a remarkable run, Schroders was also a finalist in Australian Equities (Broad Cap).
Schroders chief executive Greg Cooper was modest about the manager’s success in recent times.
“Obviously across the board a lot of our products have done quite well in a relative sense over the last 18 months,” he said.
Cooper said in that period there had almost been a return to “normality” and a shift from the high-risk end of the spectrum towards more mainstream fundamentals.
“And that’s an environment that, even though we don’t have one house view that spans all products, it’s a cultural thing that runs through most of what we do.
“It’s not surprising that in this sort of environment, where you’re seeing a massive unwind of risk aversion, that we’ve done quite well.”
Cooper praised the investment teams for “delivering across the board”.
“It would be difficult to single out any one in particular. I think they’ve all done a pretty good job.” Working in a tightening environment hasn’t impacted team numbers, Cooper said, adding that the current conditions have been quite positive for the business and, being counter-cyclical investors, now is not the time to be cutting staff.
“We’ve been on record in the past saying we think that, over the last few years you’ve seen, particularly in Australia, this strong push towards boutiques, which are relatively lightly funded and carry a lot of operational risk in our view.
“This is an environment where people start to pull back from those sorts of structures and concentrate on firms that have got a lot of capital behind them,” Cooper said, noting that Schroders has well over $2.5 billion of cash sitting on its balance sheet.
“It’s incredibly well funded, and again, to us, this is not the time to actually be cutting back on staffing. This is the time to actually expand and sort of pick up good people along the way.”
This is exactly what Schroders did last year in Australian equities, adding a couple of people to the team in the Australian operation of the global firm, which has approximately 72 staff and is one of 28 offices worldwide.
The two other finalists in the overall Fund Manager of the Year category were BT Investment Management (BTIM) and Perpetual Investment Management.
BTIM also got nods as a finalist in the Australian Equities (Broad Cap) and Property Securities (Australian) categories.
“It’s obviously very exciting [coming up in three categories],” said Dirk Morris, BTIM’s chief executive. “BT, through some very tough conditions over the last two years, has embarked on a slightly different direction in terms of the way we manage our business, our investment teams and our products.”
Morris said since floating BT on the stock market 28 months ago, it utilised more of an equity culture in how its fund managers were remunerated.
“We think that’s been rewarded [with the] stability of our investment teams across a range of products, including in particular our Australian equities, our property as well as fixed income. “So even though market conditions have been very tough, we think the new structure that we’re operating with is really starting to pay off for our clients.”
For finalist Perpetual, it comes down to quality. “Our consistent focus on quality before value was a big factor contributing to performance across all our funds,” said John Sevior, head of Australian equities.
“We have focused even more than usual on companies that would, in the first instance, survive this very testing environment, and secondly, be in a position to prosper when we come out the other side.”
