Updated with correction
More staff and more investment offerings for U.S. clients are on Standard Life Investments PLC's to-do list for 2016.
“In the early days, we focused on trading and some portfolio management” in North America, said Jack Boyce, managing director and head of North American distribution at SLI, Boston. “Portfolio management has grown substantially over the years and today includes equities, fixed income, private equity and real estate.”
SLI has been making, and will continue to make, a number of its investment strategies that have been available only to European clients available to North America. SLI has had a U.S. presence for about 13 years, but its North American staff has grown 164% since 2011. The firm now has 103 professionals across North America, most of whom are in the company's Boston headquarters.
But SLI has eight active searches “to hire across the organization in client relations, institutional sales, marketing and investment management,” Mr. Boyce said, all of which the firm expects to fill in 2016.
In addition to the growth in staff, institutional assets under management also have risen. SLI had $16.22 billion in institutional assets under management from all North American clients as of Sept. 30, up 35.1% from a year prior. This is a massive increase from the $142 million in institutional assets the firm managed in the U.S. as of Sept. 30, 2011.
As of Sept. 30, 30.8% of SLI's net inflows are from North America, compared with 26.1% from the year-earlier period.
Colin Clark, the executive director of SLI's global client group in London, in a separate interview said the U.S. market is “a very attractive market” for the company. “The success in the U.S. is a real priority for us,” he added.
Although Mr. Clark didn't cite an exact growth target for North America, a spokesman from SLI's Edinburgh office said in an e-mail the company expects the pace of AUM growth seen in the U.S. over the past five years to continue.
Mr. Clark said the firm is looking to increase its North American client base across its global equities, fixed-income, real estate, multiasset solutions, absolute return and private equity strategies.
He added that SLI is looking to market its investment strategies to insurance clients and to Taft-Hartley plans. In September, the firm recruited David Silk from Cadence Capital Management LLC to lead sales efforts for Taft-Hartley pension funds.
One step in SLI's North American expansion was establishing a subadvisory relationship with John Hancock Financial Services Inc. In January 2011, SLI announced it was selected to subadvise John Hancock's Global Absolute Return Strategies Fund. Now the firm also subadvises Hancock's Global Conservative Absolute Return Fund, an alternative fixed-income strategy, and Hancock's Global Real Estate Fund. A spokesman declined to say how much SLI manages for John Hancock.
A good deal of SLI's AUM growth in the U.S. has come from its flagship global absolute return strategy. Mr. Clark declined to provide specifics, but said GARS “currently accounts for the lion's share of the assets we're managing” for U.S. clients.
But that strategy is facing competition from similar offerings from other managers — designed by former Standard Life GARS managers.
For example, in 2012, David Millar, Dave Jubb and Richard Batty joined Invesco Perpetual, Henley-on-Thames, England, and designed the Invesco Perpetual Global Targeted Returns Fund, which was opened to investors in September 2013.
Invesco Perpetual's Global Targeted Returns Fund has £6.3 billion ($9.4 billion) in assets; of that, £86.8 million comes from U.S. clients.
In July 2013, Euan Munro, SLI's global head of multiasset investing and fixed income, left to become the CEO of London-based Aviva Investors. Almost a year later, in May 2014, Ian Pizer, investment director, multiasset investing, and portfolio manager of SLI's GARS fund and absolute-return bond strategy, joined Aviva as senior fund manager, multiassets.
The Aviva Investors Multi-Strategy Target Return fund was launched July 2014. It has about $3 billion in AUM. Of that total, about 88% is institutional and about 2% is from North American clients.
“Aviva Investors' multistrategy capabilities is a manifestation of Euan Munro's vision for the firm,” said Rob Ranges, head of Americas business development at Aviva Investors, New York. “Our goal is to be the leader in outcome-oriented strategies,” he said.
In the same interview, Timothy W. Jenkins, director, institutional sales at Aviva Investors added: “We think this (strategy) is the strongest form of AUM growth in the U.S. It's very important to us.”
SLI's Mr. Clark said executives aren't too worried about the competition: “We always figured we'd have some competition in the multiasset space. It's a big world, a big market, and that sounds fine to us.”
He noted that since launching GARS in May 2008, SLI has developed additional multiasset strategies within the GARS suite. “We've done a hell of a lot in five years. We've added new products and have even diversified the multiasset suite,” Mr. Clark said.
Performance for GARS has been strong. Data from eVestment LLC, Marietta, Ga., show its return for the year ended Sept. 30 was 2.9%, vs. 0.3% for its benchmark, the six-month London interbank offered rate. Longer term, the strategy returned an annualized 5.4% for the three years ended Sept. 30 vs. 0.42% for its benchmark, and an annualized 4.9% for five years vs. 0.47%.
So far, Invesco Perpetual's and Aviva's competing strategies are too new to record long-term performance. However, for the year ended Sept. 30, Invesco's Global Targeted Returns Fund returned 6.2% vs. 0.57% for its benchmark, the three-month LIBOR, and Aviva's strategy delivered 6.6%. The return objective for Aviva's strategy is a base rate plus 5% over a rolling five-year period.
