Railpen, Alaska & Kuwait funds form alternatives JV

Mark Mobius returns with ESG strategy

Pension giant questions managers’ bonuses

BlackRock starts AI lab, data science unit

Fidelity reverses course on research charges

Lloyds unveils £3bn strategic plan

Franklin Templeton voluntarily discloses pay gap

Amundi ends hiring freeze

Moves: Vanguard establishes European stewardship team
Railpen, Alaska & Kuwait funds form alternatives JV
RPMI Railpen, the Alaska Permanent Fund Corp. and the Public Institution for Social Security of Kuwait have joined forces to establish Capital Constellation. The joint venture will provide investment capital to first-time private equity and alternatives managers. Its first strategic partnership is with Astra Capital Management, a private equity manager in Washington, D.C., specializing in growth buyouts in the communications and technology services industries.
The founders will commit $700 million initially to Constellation, which is advised by Wafra Investment Advisory Group. Constellation aims to invest $1.5 billion or more over the next five years and will offer strategic and operational support as well as long-term capital. It intends to focus on illiquid alternatives, an area in which the supply of talented first-time managers far exceeds the supply of capital, according to a Railpen spokesman.
“We believe Constellation provides us unmatched access to the next generation of successful alternatives managers, and will be a source of long-term returns,” said Paul Bishop, Railpen Investment Director and a founding Board member of Constellation. “We think the historical outperformance of first-time funds is meaningful, as is the participation Constellation receives in GP economics.”
Julian Cripps, Managing Director of RPMI Railpen, added: “As a major global institutional investor, we are committed to using the size of our assets to invest wisely and influentially. We are not afraid to think innovatively and act boldly, as this initiative demonstrates.” 
Mark Mobius returns with ESG strategy
Veteran emerging markets manager Mark Mobius, who retired from Franklin Templeton Investments a month ago, is planning to launch a new fund. He is applying for fund management licences in Luxembourg and London to establish a long-only strategy investing in frontier and emerging markets, with an ESG tilt. As well as investing in companies that excel at environmental, social and governance factors, he will also look at stocks with the potential to improve their approach to ESG.
Mobius’ former colleague Carlos Hardenberg has just left his position as lead manager of the Templeton Emerging Markets Investment Trust, but it is unclear whether he will join Mobius.
World’s largest pension scrutinises managers’ pay
Japan’s $1.4 trillion Government Pension Investment Fund (GPIF) is investigating how its external fund managers are paid and analysing the relationship between incentives and performance. CIO Hiro Mizuno is concerned about portfolio managers receiving bonuses linked to their returns over one to three years, which is not aligned to GPIF’s stance as a “super-long-term” investor, FTfm reported.
Having interviewed its fund managers about their compensation, GPIF is now “inviting a human resource consultant to evaluate what kind of timeframe [in which] their performance will be optimised,” Mizuno said.
BlackRock starts AI lab, data science unit
BlackRock is establishing an artificial intelligence research lab in Palo Alto, California, and a data science core unit as part of its Tech 2020 plan.
Sherry Marcus and Rachel Schutt are joining BlackRock to run the data science team. Marcus was Chief Data Analytics Officer at Millennium Management. Schutt spent four years as Chief Data Scientist at News Corp. before joining Harvard University’s Institute for Applied Computational Science last year. BlackRock plans to hire another dozen or so data experts.
Stephen Boyd, a Stanford professor who has advised BlackRock since 2013, will oversee the AI lab. Its research will “augment our current teams and accelerate our efforts to bring the benefits of these technologies to the entirety of the firm and to our clients,” according to an internal memo from COO Rob Goldstein, seen by the Financial Times. “When people hear the term AI, they often think about a robot taking over the world. But this is about increasing the efficiency of what we do across the board. Every part of our business is already being augmented by these new capabilities.”  
Fidelity reverses course on research charges

Fidelity has changed its policy on charging for third-party research, after announcing in October last year that it would pass costs on to its clients. Since then, Fidelity has held extensive discussions with its clients and has now decided to pay for research from its own balance sheet instead, emulating most of its peers. Paras Anand, CIO for Equities, Europe at Fidelity International, said clients would have faced “disproportionate operational and reporting consequences,” FT Adviser reported.

Lloyds unveils £3bn, three-year strategic plan
Lloyds Banking Group has announced a three-year strategic plan, during which it will invest more than £3 billion in strategic initiatives to “enhance customer propositions, further digitise the group, maximise capabilities as an integrated financial service provider and transform the way we work.” By 2020, Lloyds intends to become “a digitised, simple, low risk, customer focused, UK financial services provider.”
This announcement follows Lloyds’ decision last week to terminate a £109 billion mandate with Standard Life Aberdeen (SLA) – a move CEO Antonio Horta-Osorio felt obliged to make after talks about merging Scottish Widows with SLA’s pensions and annuities businesses collapsed in December. The two sides could not agree on the structure for a new entity, according to The Times. SLA proposed a stand-alone joint venture, whereas Lloyds, which would have owned 60 per cent of the business, wanted to keep it as a subsidiary. 
Franklin Templeton voluntarily discloses pay gap
Franklin Templeton Investments has voluntarily published its gender pay gap, attributing the differences in compensation to the predominance of men in senior roles. None of Franklin Templeton’s legal entities individually exceed the threshold of 250 UK employees where publication of the gender pay gap is compulsory, but combined they employ 371 people. The firm has disclosed its data because “transparency and gender equality are important to us,” said Board Director Paul Brady, who is responsible for diversity and inclusion.
The mean hourly pay gap between male and female employees was 28 per cent for the year ended 5 April 2017, while bonuses diverged by 66.8 per cent. These figures “reflect a lesser number of women in the top quartiles of our pay distribution. This is predominantly due to the higher proportion of senior investment management and distribution positions occupied by men,” Brady said. “We are confident that our gender pay gap does not result from a disparity in pay levels for equivalent roles. We have a formalised pay and grading structure, assessed to be gender neutral.”
Franklin Templeton has introduced several initiatives to improve diversity and inclusion. It requests that women be included in shortlists for new positions and provides unconscious bias training to hiring managers. To help people make a smooth transition to and from parental leave, the firm offers enhanced childcare leave, childcare finders, flexible working hours and/or patterns, support through its Employee Assistance Program and enhanced parental leave.
Franklin Templeton has a growing network of Business Resource Groups, including Women@FTI, Pride@FTI and ABLE@FTI for people whose lives are impacted by disabilities. It also partners with external groups such as Stonewall, Investment2020 and Career Ready, which helps to prepare young people for the workforce.
Amundi ends hiring freeze, announces strategic plan
Amundi has lifted the hiring freeze it implemented six months ago after acquiring Pioneer Investments and is now recruiting “very selectively,” according to Financial News.
The €1.4 trillion manager is reorganising its 5,500-strong workforce in a process due to be completed by the end of June, which will involve about 500 redundancies across Amundi and Pioneer. “We have chosen the teams that have the best performance during the last four years, and the consequence is that we propose […] voluntary departure for the others,” said CEO Yves Perrier. “But what is noticeable in the integration, is the fact that we have not lost one client since the announcement of the Pioneer deal, and all key investment managers of Pioneer and Amundi that we wanted to keep on board, we have done so.”
Separately, Amundi set out a three-year strategic plan earlier this month, aiming to double its 2015 net income by 2020. Amundi’s strategy is based on organic growth, but “targeted acquisition opportunities may be seized, provided they strengthen the business-model and meet the Group's financial criteria,” the firm stated. As well as growing its retail and institutional businesses, it intends to further develop Amundi Services, which offers technology, fund administration and other services to third parties.
BNP Paribas Asset Management has hired Christophe Bonnefoux as its first Chief Data Officer. “The creation of this new role is a key step in our ambitious data management plan, which will benefit our clients, along with other initiatives in the areas of artificial intelligence and digital development,” said COO Fabrice Silberzan. Bonnefoux was Director Data & Business Analytics at Accenture Digital.
Ahmet Peker has moved to FERI Trust’s institutional client team, where he will expand its liquid multi-asset and alternative investment services, and liaise with German institutional clients. He was a Senior Portfolio Manager at Deka Investment, where he focused on hedge funds and multi-asset factor premia strategies. 
Brian Conroy, President of Fidelity International, is moving over to US sister company Fidelity Investments for an as yet unspecified role. Fidelity International Group CFO Simon Haslam will act as Interim President until a replacement is appointed.
HSBC Global Asset Management has brought in Fredrik Cygnaeus as Managing Director of its Swedish division, with responsibility for growing its business across the Nordic region. He previously led Invesco’s external wholesale business in the Nordics.
Graeme Dewar and Joy Yang have established marketβeta, which offers services to asset managers starting ETF businesses, such as setting up a distribution model. Dewar was Head of Strategy Implementation at Legal & General Investment Management, while Yang was Head of Equities at Vanguard. At marketβeta they serve as CEO and Product Specialist, respectively. They have also hired Source’s Adrian Mulryan as General Counsel. 
BlackRock’s Owen Murfin has moved to MFS Investment Management’s fixed income team as an Institutional Portfolio Manager in London.
Nuveen has hired Putnam’s Peter Whitman as a Managing Director, responsible for defined contribution investment only (DCIO) strategic accounts. It has also added American Century’s Greg Koleno and BNY Mellon’s James Polito to its DCIO sales team. AllianceBernstein’s Jeff Eng has joined Nuveen as a Managing Director, responsible for retirement solutions.
River & Mercantile has split its Audit & Risk Committee into two distinct parts. John Misselbrook, who chaired Aviva Investors until last October, joined River & Mercantile on 16 February as a non-executive director to chair the new Risk Committee.
Pierre Giannini has joined RWC Partners from Daiwa SB Investments as Head of Southern Europe.
Patrick O'Sullivan, Chairman of Old Mutual plc, will become Chairman of Saga Group on 1 May.
Paul Budgen has jumped ship from NEST to Smart Pension, where he becomes Director of Business Development.
Adrienne Monley, a Senior Strategist and Manager in Vanguard’s US investment stewardship team, has been promoted to Head of Investment Stewardship, Europe. She will lead a new London-based team researching corporate governance topics, participating in industry stewardship forums, and directly engaging with company directors and executives.
Italian manager UBI Pramerica has hired Fabrizio Fiorini from Aletti Gestielle as CIO.
Shell’s former DC Plan Manager Sebastiaan van den Dries has been appointed Director of both ING and NN’s collective DC schemes in the Netherlands.
Emma Wallis
Head of News and Insight