AXA IM pushing target return strategies
Fund managers can learn a thing or two from insurers, according to AXA Investment Management head of Australia and New Zealand, Craig Hurt.
That is because, according to Hurt, there is a global shift by long-term pension fund investors towards using a number of target return strategies adopted for decades by global insurance companies.
“Insurance companies have unique needs that give rise to some very specific behaviours and we think that some of the strategies they employ could be very relevant for Australian investors as this market transitions towards a retirement income phase,” he said.
“Insurers focus on generating specific returns to ensure they meet their liability promises rather than the less relevant return from specific market driven benchmarks. This behaviour leads to some very interesting and innovative non-benchmark driven investment strategies,” Hurt said.
AXA IM will be outlining its views on target return strategies at a series of roundtables this week, with its Europe chief investment officer at AXA IM Rosenberg Equities, Gideon Smith set to highlight four key behaviours the firm believes local investors can learn from insurers specifically relating to equity investing such as avoiding benchmarks, focusing on factors, reducing volatility, and embracing sustainability.
“Insurance companies have been wise to reject cap-weighted benchmarks because they typically have long investment horizons,” Smith said. “A relative-return perspective within the context of an overwhelmingly short horizon investment cycle risks sacrificing the long run for the sake of the short run.”
He said an efficient way of eschewing cap weighted benchmarks was to focus on factors, or risk premia investing, which represented a more direct, low cost and transparent way to improve returns by capturing attractive equity characteristics such as quality, low volatility, value, momentum or small cap.
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
