American Century Investments, a truly unique US-based global manager, has opened an Australasian office, in Sydney. Because of its ownership structure, the firm, which already has about A$2 billion in Australian-sourced mandates, can comfortably take a coveted long-term approach to investing.
As reported elsewhere last week, American Century, which has nine client funds in Australia that it has been servicing from its Hong Kong office until now, has recruited Michelle Kidd in Sydney. She has most recently worked at the big multi-affiliate manager, Affiliated Managers Group. She now reports to Elizabeth Trinh, who is in charge of Australia and New Zealand from Hong Kong, along with Tony Archer, an Aussie who is well known in the Australasian market, which he oversees, and is based in Hong Kong too.
On a regular visit to Australia last week, Joe Schultz, the New York-based ‘chief client officer’, and Trinh, down from Hong Kong, said that because of the unique nature of American Century’s ownership structure, the portfolio managers can take a “decades-long view” in their investment decisions.
Super fund executives, consultants and managers – the whole industry, in fact – have been talking about this for decades themselves. But it’s difficult to be truly long-term in your approach when you have an ownership structure which may be publically listed, or owned by another type of institution or, even, owned by individuals each of which has a different set of needs and aspirations.
Being controlled by a medical body (go figure) presents a brand-new set of long-term capabilities. American Century, which was started in 1958, is 40 per cent owned by a US cancer research organisation – the Stowers Institute for Medical Research – which has 70 per cent of the firm’s voting rights. Since 2016, Nomura Asset Management of Japan has also owned a minority share. The rest is held by the fund manager’s staff. About US$20 billion of their US$170 billion in funds under management is sourced internationally.
Schultz said last week that, because the research institute’s work tended to be decades long and because dividends from American Century’s management fees funded a lot of their work, the fund manager had the luxury to also have decades-long views for its investments.
“We’re a privately held entity,” he says. “And that is the right way to run a funds management business… We don’t use the word ‘product’ any more. We have changed the way we relate to clients… We think about our particular expertise and how that can benefit clients.”
Trinh says that the strategies that Australian and New Zealand investors are most interested in, apart from the standard global equities, are emerging market equities, global small caps and various fixed income strategies including absolute returns. She says that American Century has a comparative advantage with its Asian investments, also.
American Century has clearly been a very successful business, apart from delivering for clients. The firm has, incredibly, paid the Stowers Institute about US$1.4 billion in dividends since 2000.
Greg Bright is publisher of Investor Strategy News (Australia)