Multiasset interest leads to a hiring wave

Global money managers are looking to bolster their multiasset and diversified growth funds expertise in a bid to capture increased interest in the asset class and an anticipated boost to allocations from defined contribution plans.

This year alone, money managers including AXA Investment Managers, BlackRock Inc. and Baring Asset Management have launched or continued to expand their multiasset strategies, while Schroders PLC, Investec Asset Management, Neuberger Berman and BNP Paribas Investment Partners have been adding individuals to their multiasset teams.

Global data show these managers are onto something: Institutional net inflows into eVestment LLC's All Multi-Asset Universe totaled $6.4 billion for the quarter ended Dec. 31, compared with $4.2 billion for the same period three years earlier and $3.3 billion for the fourth quarter of 2007.

Total assets under management in the All Multi-Asset Universe was $773 billion at year-end 2013, up 83% from the $422 billion as of Dec. 31, 2010.

A multiasset or diversified growth fund invests across a variety of asset classes within one structure, with freedom for money managers to allocate to different strategies as they see fit. The funds will generally have a real-return or absolute-return target, looking for a certain level of return over inflation or above cash.

A number of retirement plans, including the U.K.'s NOW: Pensions Ltd., are built on a diversified growth fund.

Money managers say while interest continues to pick up in countries where multiasset and diversified growth funds are already established, such as the U.K. and Germany, it is spreading across Europe. They say pension plans in the Netherlands, where there had previously not been interest in the strategies, are looking to allocate as part of the shift to defined contribution pension systems from defined benefit provision.

“Investment in multiasset and DGFs began with DB, but over the last few years a number of DC schemes have invested, particularly in their” default options, said Nico Aspinall, London-based head of defined contribution investment at Towers Watson & Co.

That opportunity has not been ignored by the money managers, and with the anticipated flood of DC money into the strategies over the next few years, managers are building up their multiasset teams.

“There has been an arms race for intellect by asset managers to build multiasset (businesses),” said David Aird, London-based head of U.K. business at Investec Asset Management.

One U.K.-based multiasset executive said that when he worked at a financial consulting firm in a role that focused on multiasset and DGF funds, he was receiving “daily” calls from recruiters looking to add him to their money manager clients' teams.

“This is one of the hottest areas of our commercial asset management searches, both from an investment and distribution standpoint,” said Renee Neri, a principal in executive search firm Heidrick & Struggles' New York office, and a member of its asset management and wealth management practices, focusing on financial services leadership challenges. “Today we are seeing far less activity coming out of traditional single-strategy portfolio managers.”

Ms. Neri said her work, which typically focuses on between five and seven of these types of multiasset searches for the year, has “greatly expanded” in the multiasset category, with demand for expertise coming from a number of sources. “There are a variety of players in the space today — you have asset managers expanding their multiasset solutions, investment consultancies in the U.S. expanding to serve almost as quasi-asset managers — with discretionary experts such as fiduciary management or implemented consulting, and outsourced CIO platforms. And smaller boutique solutions and players in the liability-driven investment space getting into multiasset.”

The skills they desire cover a wide range. “Managers are looking for individuals with some propensity to work across asset classes, and to have a macro perspective,” said Ms. Neri. “They want someone that has the training and aptitude of investment management, as well as someone who can translate opinions into actionable and alpha-generating strategies.”

The trend is similar in the U.K. Paul Battye, Leeds and London-based CEO of executive search firm Moorlands Human Capital, said he is looking for an entire U.K. team for diversified growth funds for one money manager. He declined to name the manager.

One recruiting executive said money managers are struggling to find the right people for their teams. “Running multiasset portfolios and trading is typically confined to hedge funds, although the asset management community is catching on that they can run these strategies themselves,” said Chris Forbes, CEO at executive search firm Ph.D. Search & Selection in London. “Demand is growing, and the biggest problem in finding the right people in this space is that most of the people who run these funds work in hedge funds, and the asset managers cannot compete with the (compensation) packages on offer. Therefore, they need to either train their existing portfolio managers or move quantitative analysts into portfolio management roles.”

Money managers that can afford to look elsewhere, said Ms. Neri, are looking at individuals that have been strategists in the banking community or institutional plan sponsors and allocators — including sovereign wealth funds, pension funds, endowments and foundations in the U.S. “But above all they must have the ability to be commercial,” she said, since they are now selling an investment philosophy rather than a specific product.

Investec is one of those managers that has built up its multiasset capability. Mr. Aird said the $107 billion money manager has been remodeling its multiasset capability for the last year and a half, which kicked off with the hire of Michael Spinks as co-head of multiasset in September 2012, from rival Schroders.

The team is running $18 billion, with 24 members split between London and Cape Town, South Africa, and the firm will continue to tweak and add talent as necessary.

The firm looked to the U.K.'s financial consultants to help round out its multiasset team, hiring Atul Shinh from Mercer Ltd. to work on product and process management, late last year.

“We needed someone from the consultant side who had a sense of what clients require — someone who could sit in front of a pension scheme and understand its needs, whether it is a DB or a DC scheme,” said Mr. Aird of Mr. Shinh's hire. “And someone who could bring knowledge about the competitors, and how we could position ourselves to be in the sweet spot.” The firm also hired Edmund Ng as a portfolio manager, responsible for leading equity research and the development of equity strategies, from TT International, at the end of 2013.

Money managers that are in hiring mode include:

• Schroders, which splits its multiasset capability into five areas — wealth preservation, risk-controlled growth, inflation, income and risk mitigation. The $435.4 billion money manager is recruiting in the U.S. in particular for multiasset, around its risk controlled growth and wealth preservation strategies, and is looking to add to its risk mitigation division, too. “We need senior, experienced portfolio solutions experts, product managers, analysts and product executives,” said Nicolaas Marais, London-based global head of multiasset at Schroders. “We want the full experience — usually a strong liability-driven investment background, strong structuring knowledge covering derivatives and other structured products, and credibility within the U.S. context.” The firm will also launch an income-type product in the U.S. “in the next few months.” The U.K. team, he said, is also expanding.


• Standard Life Investments is building on its successful Global Absolute Return Strategy with an expansion in the U.S. It runs $55 billion across multiasset strategies across the globe. Jack Boyce, managing director, head of U.S. distribution, based in Boston, said the U.S. effort, which “certainly” includes multiasset, is “very much in growth mode,” and the firm is looking to add three people to its distribution group over this year.


• BNP Paribas Investment Partners is looking for talent in multiasset — specifically those with previous experience in running these strategies. “The people we are hiring need to have experience in the multiasset space,” said Charles Janssen, head of multiasset solutions at BNP Paribas Investment Partners, based in Amsterdam and London. “We are also looking for people with a background in multiasset products for product development.”

BNP Paribas Investment Partners, which runs €53 billion ($73.2 billion) in its multiasset solutions business — of which multiasset products accounts for €37 billion, and solutions such as fiduciary management makes up the remaining €16 billion — hired Colin Graham last month as chief investment officer of the multiasset team and head of tactical asset allocation and research. He was plucked from rival BlackRock, where he was co-head of the global multiasset strategies team.