BT to expand offshore investment capabilities

BT Funds Management(BTFM) will expand its international capabilities with the addition of small number of Australian analysts in the group’s investment offices in Singapore, London and New York.

The move is similar to another undertaken by BTFM 18 months ago when some of the manager’s Pacific Basin investment team, under Chris Ong, relocated to Singapore.

The current moves were announced as part ofAssirt’smid year report on BTFM and marks a departure away from the group’s strategy of having investment personnel working on international portfolios based out of Australia.

The report also states BTFM is looking to increase its international capabilities by using the resources of its US parent, Principal. According to Assirt, BT is investigating the use of a combined research database which would provide BT with access to 130 analysts across both groups.

Assirt says such a move would be positive as Principal’s value management style will introduce a different perspective to bottom up stock research currently in use by BTFM.

Despite this, Assirt says there may be a period of change as BTFM considers redeploying personnel to limit duplication of information created from using a combined research database.

In other areas, BTFM also maintained a steady balance with Assirt demoting its rating of the manager’s capabilities in Australian fixed interest, but maintaining previous rating of BT’s other sectors.

The recent appointment of David Frazier as head of Australian fixed interest in the wake of the departure of Steven Miller and other team members last year, also prompted Assirt to state that it was concerned with the level of staff changes and issues of succession planing in light of the loss of a number of experienced staff.

While it has downgraded the fund manager’s rating from strong to competent, Assirt says, overall, the fixed interest process remains well structured.

BT’s new small caps equities team in Brian Eley and Ben Griffiths, formerly of ING, were applauded by BT as having “a keen sense of the small caps market and the factors that are important to the success of a smaller company”. But given what Assirt describes as the newness of the team, the current rating of “competent” stands.

This differs from research house van Eyk’s rating of BT’s new small caps team last month, where BT were given an “A” rating.

In other areas of investment capabilities, Assirt maintained a ‘competent’ rating in international fixed interest and Australian equities, and a ‘weak’ rating for international equities.

In terms of international equities, Assirt says while BT plans to open offices in major centres overseas and enhance the synergies it has with US-based parent Principal, “the realisation of the potential advantages will be some time off”.

“Recently BT has begun to explore the possible synergies and cost saving benefits associated with having a global parent. If leveraging strategies are appropriately harnessed, Assirt believes there exist definable potential upside,” Assirt head of research John Parrish says.

For Australian equities, Assirt was upbeat on the changed culture within the team under new leadership, and forecasted a “better quality of research” from the group. Additionally, BT’s performance has become competitive relative to peers, says Assirt. However, its disappointing absolute returns appear to have led the research house maintain its rating of competent for the fund manager.