Australia’s buy-side investment community, as represented by Bloomberg clients and prospects, is looking beyond domestic and traditional asset allocations for growth, according to the latest series of the information company’s forums for investors.
The global series of ‘buy-side’ forums, which began as the 8th annual ‘London Buy-Side Forum’, in May 2016, and continued to Hong Kong and Sydney in June, brought some new perspectives to the community of asset managers, asset owners, pension funds, insurers and hedge funds.
In the polling of participants, Steve Ioannou, Bloomberg global head of AIM (asset and investment manager) sales and account management, who is based in Hong Kong, said five themes surfaced from the Sydney event, which were broadly consistent with the similar events overseas. They were:
- Australian investors are increasing looking to diversify their portfolios into non-traditional asset classes. 27 per cent of buy-side investors we polled said they were more likely to invest in multi-asset strategies over the next 12 months. Also high up the pecking order were alternatives, with 19 per cent planning to increase their exposure to make returns.
- An overwhelming 63 per cent of participants were of the view that they were not internationalising their operations fast enough. This reinforces what clients are telling us – that Australian investors want and need international exposure to new asset classes.
- In an increasingly tech-savvy market, it’s not surprising that fintech is on the Australian buy-side radar. But despite some interesting discussions around the potential for blockchain and the use of robo-advisers in engaging with the future generations of savers, the biggest industry disruptor was seen as Big Data.
A total of 38 per cent cited ‘big data’ having the most impact on the industry, indicating the need for fund managers to harness the power of data in their own operations. - Efficiency, or ‘operational alpha’, which was a big theme to emerge from last year’s conference, was also discussed in Sydney. Boston Consulting Group research shows that operational alpha can lead to 36 per cent improved performance for asset managers.
With increased scrutiny of fees and passive alternatives to active funds, this continued to be a major discussion item in Sydney this year. - Interestingly, Ioannou said, considering the Australian economy’s fortunes have been so hitched to China’s economy, 70 per cent of investors did not plan to include a China fund in their portfolio.
A lack of market transparency is seen as the major inhibitor with respect to investing in China. In the past, Australian equities in some sectors have acted as a proxy for Chinese growth but with the changing nature of Chinese growth towards the consumer, it will be interesting to track how this theme develops in future forums.
“As the buy-side continues to evolve post financial crisis, connectivity to the international markets has never been more important to Australian investors. Tools, such as our own Bloomberg AIM are critical to help navigate multiple asset classes and jurisdictions in an efficient and compliant manner,” Ioannou said.
Meanwhile, earlier this month the Australian boutique investment platform, Netwealth, handed Russell Investments a AU$400 million multi-asset fund mandate.
The Russell multi-asset funds – available exclusively as part of the Netwealth ‘global specialist series’ – cover four risk profiles.
The deal is further evidence of the increasing popularity of multi-asset investing, especially since the global financial crisis, primarily because such strategies are well suited to matching investors’ target outcomes.
* Greg Bright is publisher of Investor Strategy News (Australia)