Edinburgh Partners hits ‘pause’ on 2 strategies

Consistently strong returns have helped grow assets under management at equity boutique Edinburgh Partners Ltd. to $11.3 billion as of March 31, an increase of nearly $2 billion on an annualized basis for each of the past six years.

In fact, the Edinburgh-based institutional manager has been so successful attracting business since the firm was founded in 2003 that it's had to press the pause button.

Last month, it closed temporarily to new separate account business in both of its primary strategies, unconstrained global and Europe, Australasia, Far East equities. Edinburgh Partners continues to take on pooled assets in both strategies, as well as separate account and pooled in its unconstrained European equity strategy; it expects to open all of the strategies to new business by the end of the year.

Janet Price, client service partner at Edinburgh Partners, noted the firm also closed to new assets in 2007, and that the recent closure was driven by many factors. “The most important one is that we've been quite busy; we have a full pipeline,” she said.

The recent closure came after assets under management rose 64% in 2009, according to data from eVestment Alliance LLC in Marietta, Ga.

U.K. institutional investors have been piling into unconstrained global equity strategies (Pensions & Investments, June 14). However, Edinburgh Partners has diversified its client base while growing assets: U.K.-based client assets accounted for about 36% of total assets as of March 31, down from 68% two years before. U.S. client assets constituted 18.4% of total assets; Australian assets, 7.9%; Canadian assets, 7.1%; and continental European assets, 2.6%, according to eVestment Alliance. (The remaining assets were classified as “other.”) Ms. Price declined to reveal the firm's geographic breakdown of client assets. As of March 31, 2008, client assets broke down as follows: U.S. 10%, Australia 5.8%, Canada 7.1% and continental Europe 6.6%.

Last October, Edinburgh won an unconstrained equity mandate from the A$8 billion (US$6.9 billion) Government Employees Superannuation Board, Perth, Australia. Although Sharon Hicks, GESB's chief investment officer, would not reveal the size of the mandates, she told Investment magazine in Sydney at the time: “If we are going to introduce a manager into a portfolio, they're coming in for material changes.”

Returns in the closed strategies have been impressive, with both outperforming their respective benchmarks for one-, three- and five-year periods ended March 31 by 95 basis points or better. Since inception in January 2004, the unconstrained global equity strategy has returned 9.75% annualized vs. 5.34% for the Morgan Stanley (MS) Capital International All Country World index (net dividends), while the EAFE strategy, also since the same inception date, has risen 12.3% vs. 6.04% for the MSCI EAFE index (net dividends).

The firm was founded in 2003 by Sandy Nairn and Graham Campbell, who left Scottish Widows Investment Partnership to set up the firm. At the end of last year, Mr. Campbell, who ran the firm's U.K. equity strategy, resigned, and the strategy was wound down. And in November, investment partner Christine Montgomery left to become a director and global equity portfolio manager at Edinburgh-based Martin Currie Investment Management Ltd. Ms. Montgomery could not be reached.

Since then however, Graham Wood, formerly director and CIO of equities at Scottish Widows, joined Edinburgh Partners as an investment partner; also, Peter Reid, CIO of Ignis Asset Management, will join as an investment partner in September.

After a preliminary call, Ms. Price could not be reached and Edinburgh Partners declined to provide further information.