US-headquartered firm Cambridge Associates has picked up the investment consultancy gig at the $200 million plus BayTrust replacing long-time incumbent Russell Investments.
Alastair Rhodes, BayTrust CEO, said Cambridge would take over portfolio duties this April from Russell, which has held the role for 20 years.
The tender attracted seven bids that were whittled down to a shortlist of Russell and Cambridge in a process assisted by Fidato Advisory, a consultancy firm headed by former Russell NZ chief, Ed Schuck.
In a statement Rhodes said switching investment consultants was one of BayTrust’s ‘most important and defining’ decisions of recent times.
“In the end it came down to a decision between two quality providers – our incumbent, Russell Investments, and Cambridge Associates who we ultimately feel are a better fit, particularly as we continue to focus on further diversifying our investment portfolio,” he said in the release.
The news likely heralds a shake-up for BayTrust’s underlying managers with Cambridge self-described focus on delivering “innovative portfolio management services”. For example, the $1.3 billion Foundation North (formerly ASB Community Trust and Cambridge’s first NZ client) invests in 26 underlying managers split into four asset groups labeled growth, diversification, inflation hedging, and deflation hedging – including sizeable investments in private equity, hedge funds, infrastructure and other alternative assets.
The Tauranga-based fund recently upped its allocation to growth assets and private equity as well as doubling an ‘impact investing’ exposure to 6 per cent of the total portfolio.
“These changes are designed to both tap into higher returns and the illiquidity premium associated with Private Equity which is a natural fit for BayTrust as a perpetual Trust, and to more actively invest in growing NZ and BOP investments driving social impact as well as financial returns compared to our previous largely passive NZ investment strategy,” the BayTrust 2017 report says.
BayTrust marks Cambridge’s 11th consulting conquest in NZ since securing ASB Community Trust (also from Russell) in 2010.
Cambridge has accrued over 1,130 clients globally after launching in 1973 including high-profile organisations such as the Bill and Melinda Gates Foundation and several Ivy League university endowment funds.
According to the Wall Street Journal, last year Cambridge laid off about 50 staff – or 3 per cent of its global workforce – with CEO, David Druley reportedly saying the firm was becoming “more of an investment firm and less of a consulting firm”.
Kenneth Brown, BayTrust board chairman, paid tribute to Russell in a statement for its 20-year service to the fund, which has grown from $89 million in 1988 to about $205 million as at March last year.
“We acknowledge [Russell’s] professionalism and their dedication to us and Bay of Plenty communities over the years, in particular helping to advise us through the challenging Global Financial Crisis which is one of the key reasons why BayTrust is in such a strong current financial position,” Brown said in the statement. “We are now looking forward to working with Cambridge Associates to help guide us through the next phase of diversification.”