Moves: Franklin Templeton star managers join Mobius' boutique
Digital deep dive
PIMCO plans Austin tech hub
PIMCO will open an office in Austin, Texas this year to recruit software specialists, as it seeks to launch computer-driven funds, transform its technology, cut costs and enhance its idea-generation processes. As the Wall Street Journal quipped, “PIMCO’s new bond king could be a robot in Austin.”
Pat Feigley, Head of US Sales for Wealth Management, will run the Austin office. It will grow to about 200 staff by the end of 2019, many of whom will be technologists. Austin was chosen for its technology corridor, its proximity to some of PIMCO’s clients, and because it is home to the University of Texas.
PIMCO is approaching universities to form a research partnership to study machine-learning techniques. It also intends to expand its 65-strong portfolio management analytics team, led by Ravi Mattu, Global Head of Analytics. The firm will develop more analytical tools and is looking for new databases, in particular consumer data to help forecast inflation. CEO Emmanuel Roman aims to partner with at least one third-party tech provider, according to Financial News. The bond behemoth is also increasing its electronic trading activities to lower execution costs.
Finance enters the space age
The European Space Agency (ESA) and Mosaic Smart Data are investigating whether the former’s machine learning models can be applied to financial markets.
Mosaic will research whether the algorithms that ESA uses to monitor thousands of instruments on satellites in deep space missions are capable of flagging suspect trades. If a jointly-funded feasibility study is successful, ESA’s technology will be built into London-based Mosaic’s financial analytics models.
Mosaic will also test whether ESA’s algorithms can identify market correlations, create hedging strategy recommendations, and give sales and trading teams an indication of the market factors impacting their performance.
“From fighting climate change to improving financial market surveillance, data analytics technology has the potential to radically reshape the way we approach challenges,” said Mosaic’s CEO Matthew Hodgson. “Through this collaboration we have an incredible opportunity to apply some of the world’s most advanced data analytics models to the problems our clients face in financial markets.”
DWS ramps up digital fund platform
DWS is building a scalable digital investment platform called IKS 2.0. It will encompass DWS' €100 billion fund management platform IKS, robo-adviser WISE, investment app Edison and the DWS Direct distribution platform.
Kai Bald and Stephan Scholl have been appointed Co-Heads of IKS 2.0; Bald is currently Head of Digital, while Scholl oversees platform management.
“Fund platform business models are one of the key growth areas in asset management in Europe, and are expected to significantly outgrow traditional asset products,” said Thorsten Michalik, Head of Coverage for EMEA and APAC.
Separately, parent Deutsche Bank’s new CEO Christian Sewing has announced plans to scale back the investment bank, exit activities where it lacks “a sustainable competitive advantage” and cut jobs. “We are not strong enough in [some] areas,” he admitted. “Therefore we have to act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are not acceptable.”
Managers experience tech growing pains
Asset managers are spending an average of £15 million a year on digital resources, although some are investing £50 million or more, according to Alpha FMC. The consultancy surveyed 15 large, global asset managers, of whom 12 are prioritising digital transformation. Managers are using technology to improve distribution, achieve economies of scale and, crucially, enhance client experience.
However, almost a quarter of respondents said their digital maturity is “frustratingly fragmented” and they are beginning to lag behind other organisations. Obstacles to digital transformation include legacy IT, company culture and a lack of investment or skills, respondents said.
“The industry is still experiencing growing pains in its digital journey,” said Kevin O'Shaughnessy, Head of Digital at Alpha FMC. “Our research shows firms are currently focused on defining the role of digital, setting up the functions and investing in core digital enablers such as content management, social, analytics and data capability.”
Over the next three to five years, Alpha FMC expects investment managers to shift their attention away from data management, cloud services and social media, towards artificial intelligence, machine learning and blockchain.
NN IP forms alliance with ChinaAMC
NN Investment Partners (NN IP) and China Asset Management Co. (ChinaAMC) have signed a memorandum of understanding to develop investment strategies together. Dutch ESG specialist NN IP will assist ChinaAMC to incorporate environmental, social and governance factors into its investment processes. The two firms will also join forces for opportunities associated with China’s Belt and Road Initiative.
“ChinaAMC hopes to bring more sophisticated investment strategies into China through cooperation with globally renowned asset management organisations like NN IP. This will provide domestic investors with better investment products and services,” said Tang Xiaodong, CEO of ChinaAMC. “At the same time, ChinaAMC also hopes to increase the international institutions’ understanding of the Chinese capital markets and the Chinese asset management industry, so that these investors will also have more opportunities to participate in China’s economic development.”
NN IP’s CEO Satish Bapat added: “ChinaAMC’s in-depth knowledge of the Chinese capital markets and NN IP’s long heritage in sustainable investing is a complementary combination that we believe may create long-term value for investors.”
UBS, J.P. Morgan lead the way in China
UBS Asset Management has leapfrogged J.P. Morgan Asset Management to head a league table of international managers operating onshore in China. Schroders, Invesco and BlackRock rounded out the top five. Shanghai-based consultancy Z-Ben scored firms against 52 factors, including the Chinese assets they manage and their capacity to handle Chinese investors’ international portfolios. Vanguard and Bridgewater dropped out of the top 25 this year.
“It is now clear which global managers are genuinely serious about building a China business that has both breadth and depth,” said Peter Alexander, a Managing Director at Z-Ben. “We see resources being allocated, concrete plans being made and executed with the full support of the most senior management.”
The People's Bank of China plans to allow foreign firms to acquire majority stakes in domestic fund managers, while China's Ministry of Finance is preparing to pilot a private pension system. However, most international asset managers are still unprepared to take advantage of the growth in China’s savings market, Alexander said. “Too few global managers are making any real effort to build a presence in China," he told the Financial Times. "Too often I hear ‘we can’t compete in China’ and that is the end of the discussion. To be blunt, they are wrong.”
Emma Adair has moved from Cardano to Aon to become Head of Client Service for UK Investment.
Artemis Investment Management has appointed Alan Brown as Chair of its management committee and Nicky McCabe as Chair of its compliance and risk committee. Brown is a former CIO of Schroders and McCabe was Head of Investment Trusts at Fidelity International.
Fulcrum Asset Management’s Charles Jewkes has joined Aviva Investors as Head of Global Financial Institutions.
AXA Investment Managers’ Nigel Thomas, who runs the £3 billion AXA Framlington UK Select Opportunities fund, will retire in March 2019. Chris St John will replace him on 31 December 2018; he already manages a similar multi-cap strategy in the AXA WF Framlington UK fund and has been identified as Thomas' successor since 2013.
Bank of America Merrill Lynch hired Rajesh Krishnamachari last month as Head of Data Science for Equities in New York. He was a Senior Quantitative Strategist and Researcher at J.P. Morgan, part of the global macro quantitative and derivatives strategy team, and a member of the Quant Research Council (which oversees applications of data science and AI.)
Credit Suisse Asset Management’s private fund division has established a direct and co-investments group under Managing Director Paul Van Hook and hired Imran Hameed as a Director. He was a Principal at private equity firm Mercury Capital Advisors in New York.
Fulcrum Asset Management has added Winton’s Barry McCaldin as Director of Systematic Sales.
Gravis Capital Management has hired Nick Winder as Sales Director and Lexi Diggins as Marketing Manager. Winder led third-party distribution for Columbia Threadneedle Investments. Diggins has worked in business development at SavvyWoman.co.uk and Fidelity International.
Carlos Hardenberg and Greg Konieczny (two of Franklin Templeton Investments’ best-known portfolio managers) will become Partners of former colleague Mark Mobius’ new boutique, Mobius Capital Partners. Hardenberg managed the flagship Templeton Emerging Markets fund. Konieczny was Director of Specialty Strategies for Templeton Emerging Markets Group and CEO Romania.
Nordea Liv & Pension has appointed Copenhagen-based Anne Broeng as Chair. She is a former CIO and CFO of PFA Pension, where she worked from 2002 until 2014.
PATRIZIA Immobilien AG in Augsburg, Germany, has named Johannes Haug Head of European Real Estate Development, effective 19 June. He was Global Head of Acquisitions at Pembroke.
Alan Wilson, a Senior Portfolio Manager at State Street Global Advisors, is joining Schroders' multi-sector fixed income team. Robbie Boukhoufane, Global Head of Fixed Income and FX Trading at Schroders, is also moving into the multi-sector bond team. The pair worked together at Gartmore.
State Street Corp. has named Fenergo’s Richard Irons as Head of Sales for Global Exchange in EMEA.
Vanguard has hired Liz Wright as Senior ETF Sales Specialist. She was Head of UK Wealth and Intermediaries at ETF Securities.
There will be no issue of the weekly digest published next week (Friday 4th May). It will return as normal on Friday 11th May.