There is some debate as to what firm set up the first asset consulting business in Australia and New Zealand – either the old Frank Russell Co or the old Towers Perrin. But the year they both set up shop, in Sydney, is certain – 1986. They and the firms that followed them changed the institutional investment landscape for the better.
Like fund managers and their clients, though, asset consultants have had to evolve to survive and grow. So, the 10th anniversary in Australia and New Zealand of one of the world’s largest, Cambridge Associates, is worth celebrating. Cambridge is one of only two remaining in Australia which does not sell investment products; the other being Frontier Advisors (see separate report).
According to Eugene Snyman, who established the Cambridge presence in Australia, after helping to set up the Singapore office, the firm prides itself on having very long-term client relationships, befitting the long-term investment horizons that most of them have. He is also proud of the firm’s staff retention at a time when other asset consultants have suffered losses to super funds and managers.
There are 13 staff, including two managing directors, Snyman and Travis Schoenleber, and two investment directors, Margaret Schlott and Katherine Moseley. They oversee 12 Australian clients and 10 in New Zealand. They consist of 10 endowments and foundations, six family offices and six super funds.
Dispelling a misconception that Cambridge concentrates on alternative asset classes, Snyman says, only five of the 22 client funds are advised specifically on alternatives. Some of the Australian clients have been with the firm for 10 years. It covers all asset classes, reviewing more than 31,000 products globally, of which only about 4-5 per cent ever get recommended.
The firm was started in 1973 by Hunter Lewis and James Bailey, who remain shareholders. There were 12 initial shareholders, including the foundations of some of the most prestigious universities in the US. Today there are also about 200 managing directors around the world who have staff options. The 1200 total staff service 1,138 clients from 11 offices. Of those clients, 679 are endowments and foundations, 281 are family office and 178 are pension or super funds.
Perhaps reflecting its genesis with university foundations and the research-driven culture of the firm, the large proportion of foundations and family offices tends to define how the firm approaches investments.
Cambridge eschews the term ‘asset consultant’ and prefers to call itself ‘an independent investment adviser’, Snyman says. The environment for asset consultants has been difficult in recent years because of the consolidation among super funds and the insourcing of investments. Super funds, too, have become increasingly fee driven, partly because of regulatory pressure. “Our clients are more fee conscious than fee driven,” Snyman says.
Endowments have a pool of capital which has a very long time horizon in a way which is similar to the horizon for most family offices, that are usually looking for multi-generational continuance.
“[Cambridge] helped develop their model for investing,” he says. “There’s a nice fit between family offices and endowments… They also have a strong focus on philanthropic endeavours.”
This means that Cambridge has to be on top of what it calls “mission-related investing” that encompasses ESG, sustainable investing and impact investing. New Zealand funds, in particular, were very early adopters of ESG principles.
Recent big calls include an overweight to emerging markets and also private credit, which is benefitting from the dislocation in the banking sector following the GFC. Snyman says the firm has also been looking at trend-following strategies and the emerging asset classes such as royalties.
Greg Bright is publisher of Investor Strategy News (Australia)