GENERATING ALPHA IN INSTITUTIONAL SALES & DISTRIBUTION

Size: px

Start display at page:

Download "GENERATING ALPHA IN INSTITUTIONAL SALES & DISTRIBUTION"

Paulina King
6 years ago
Views:

1 GENERATING ALPHA IN INSTITUTIONAL SALES & DISTRIBUTION

2 Andrew Bevan, CFA, CAIA Formerly in Business Development Horizon Kinetics LLC Maria Simon Formerly in Institutional Marketing Local Tapiola Asset Management EMEA Michele Shauf, PhD Formerly in Global Learning Invesco

3 DISTRIBUTION ALPHA 1. Flows to a strategy in excess of what s attributable to investment performance; 2. Metric quantifying the impact of Sales, Marketing and Consultant Relations.

4 DELIVERING FIRM RESULTS α THEN

5 DELIVERING FIRM RESULTS α THEN DISTRIBUTION α NOW α

6 TIME MANDATES

7 Flows hit inflection points Allocations are revisited Manager scrutiny increases MANDATES

8 α MANDATES

9 α MANDATES Bottom up, fundamental research

10 Bottom up target setting is the approach that correlates more closely with strong performance.

11 MACRO-LEVEL RESEARCH IN SPACES WHERE YOU COMPETE Universe Q Inst. AUM (USD BN) 1Q'17 Net Inst. Flows (USD BN) 1Q'17 Gross Inflows 1Q'17 Gross Outflows FY 2016 Change FY 2015 Change FY 2014 Change All US Equity $7, ($57.69) $99.20 ($156.89) -5.30% -4.79% -3.95% All Global Equity $2, ($3.44) $43.46 ($46.90) -2.78% -1.60% 0.97% All Emerging Mkts Equity $ ($0.66) $16.32 ($16.98) 0.24% -2.22% 2.32% All EAFE Equity $1, ($5.91) $15.63 ($21.54) -0.58% 1.23% 0.89% All ACWI ex-us Equity $ $1.73 $13.73 ($12.00) 1.01% 4.08% 2.82% All Europe Equity $ ($11.31) $5.18 ($16.49) % 2.32% 2.90% All Japan Equity $ $0.40 $3.90 ($4.30) -4.09% -2.78% 0.88% All Australian Equity $ $0.11 $3.56 $ % -2.02% -7.98% All Asia Pacific Equity $ ($11.34) $3.21 ($14.55) -8.01% -9.97% -6.47% All Canadian Equity $ ($0.66) $2.96 ($3.63) -0.33% -1.83% -4.75% All UK Equity $ ($4.93) $0.71 ($5.64) -7.63% -3.30% -1.49%

12 DRILL INTO CHANGES WITHIN A SPECIFIC MARKET Gross Flows Institutional AUM All Emerging Markets Equity Inflows Outflows Net Flows

13 CLIENT TYPES DRIVING CHANGES Investor Types Buying (2016) Investor Types Selling (2016) DC Public Fund Insurance Superannuation Health Care USD M $1,832 $1,725 $404 $84 $22 Corporate Sub-Advised Sovereign Wealth Funds Foundations and Endowments Wrap Accounts

14 RESEARCH PRODUCT GROWTH POTENTIAL Product Performance Asset Flows Marketability Universe Health Distr. Impact Marketability Metrics Score Value Investor Sentiment 5 81 Fee Level ($50 Mil) 3 90 BPS Number of Holdings Source: ev Scorecard

15 α MANDATES Bottom up, fundamental research Strong market awareness

16 Monitor the data you re providing to the market

17 MEASURE YOUR VISIBILITY 17.7% Fail Pass 82.3% Missing Data Criteria Not Met Total Screens Failed Screens

18 α Mandates Bottom up, fundamental research Strong market awareness Insight into what the market values and how they measure up

19 ARE WE REACHING OUR INTENDED AUDIENCES? Consultants Profile Reviews Of Manager Data (6 Month Rolling Average) Manager 1 US High Yield Fixed Income All US Fixed Income

20 MONITORING RELATIVE PRODUCT INTEREST Region Product Views Universe Views Northwest 9.3% 7.1% Southwest 15.8% 8.9% Midwest 42.3% 35.8% Northeast 22.8% 39.4% Southeast 9.8% 8.7%

21 KNOW WHAT CRITERIA YOUR PROSPECTS WANT TO SEE Product AUM Firm AUM Returns 3 Year Returns 5 Year Investment Philosophy Vehicle Category Current # of Holdings Excess Returns 3 years Returns 1 year Excess Returns - 5 years Total % Minority Owned US Investment Grade Corporates Returns - 10 Year ESG Investment Bias Personnel Turnover Total Institutional AUM % Employee Owned Standard Deviation/Information Ratio - 5 year

22 KNOW WHAT THRESHOLDS YOUR PROSPECTS ARE SETTING 17.7% Current # of Holdings Screen Term Actual Value % Missing Data Criteria Not Met Active Share Screen Term Actual value Investment Approach Screen Term Actual value Fundamental Quantitative

23 TAKE A VIRTUAL SEAT IN THE BOARD ROOM

24 α Mandates Bottom up, fundamental research Strong market awareness Insight into what the market values and how they measure up Targeted, timely prospecting

25 TARGETED, TIMELY PROSPECTING Institution Consultant Document Type Date Comments Maryland State Retirement Meketa Asset Allocation 5/16/17 Asset Allocation Recommendation -- Option B -- increasing growth equity by 5%, decreasing fixed income by 2%, decreasing absolute return by 2%, and eliminating allocation to commodities San Diego City ERS Aon Hewitt Asset Allocation 5/11/17 Portfolio Structure Review, no significant changes recommended, potential to increase active management Alameda County Verus Asset Allocation 5/10/17 Recommendation to increase passive large cap, decrease large cap value, and consider small cap core mandate New Mexico SIC Permanent RVK Asset Allocation 4/25/17 Capital Markets Assumptions Review and Asset Allocation Considerations -- Recommendation to increase real estate and re-categorize asset classes Vermont SRS NEPC Asset Allocation 3/28/17 New mandates expected for global equity, private equity, and private debt Source: Public Plan IQ

26 MONITOR VULNERABLE COMPETITORS People Changes Large AUM Changes Large Increase In Consultant Reviews Constituent Changes New Products in Bottom Quartile Person Title Firm Product Departure Date Reason PM A Global EM 05/01/17 Resigned Co-PM B EM Equity 05/01/17 Terminated CIO C EM Equity 04/30/17 Retired PM D EM Equity 04/16/17 Resigned Senior Analyst D Global EM 04/01/17 Resigned Head of Research E EM Equity 03/31/17 Resigned

27 α MANDATES Bottom up, fundamental research Strong market awareness Insight into what the market values and how they measure up Targeted, timely prospecting Articulating intrinsic differentiators

28 CRAFTING A MEMORABLE STORY AND QUANTIFYING DIFFERNTIATORS Portfolio Russell 2000 Value 24% 19% 30% 12%

29 CRAFTING A MEMORABLE STORY AND QUANTIFYING DIFFERNTIATORS Portfolio evestment US Small Cap Value Equity 24% 19% 22% 18%

30 α MANDATES Bottom up, fundamental research Strong market awareness Insight into what the market values and how they measure up Targeted, timely prospecting Articulating intrinsic differentiators

33 ABOUT EVESTMENT 850+ asset owners and gatekeepers use evestment for research, and their screening activity provides a wealth of data on the products they re analyzing and the managers they re comparing. 76% of the top 50 consultants world-wide use evestment data to screen, select and monitor managers. We d love to show you how to implement a more data-driven, structured approach in your distribution organization. info@evestment.com +1 (877)

CONSULTANT BRIEFING. New York City April 20, Chris Riley, Aon Hewitt John Molesphini, evestment Jerrod Stoller, evestment

CONSULTANT BRIEFING. New York City April 20, Chris Riley, Aon Hewitt John Molesphini, evestment Jerrod Stoller, evestment CONSULTANT BRIEFING New York City April 20, 2017 Chris Riley, Aon Hewitt John Molesphini, evestment Jerrod Stoller, evestment Fee Pressure Low Yield 2016 BREXIT Market Volatility Active vs. Passive Presidential