Opportunism key for Challenger funds management
Co-manufacturing of investment products and the formation of new strategic partnerships with boutique fund managers will play a key role in Challenger’s efforts this year, as it strives to continually capture above-benchmark returns in a market with ever-dwindling sources of alpha.
Speaking broadly, Rob Adams, Challenger chief executive, funds management, flagged plans to take a number of products offshore and to proactively foster investment relationships with high quality offshore clients.
Unable to identify any specific sectors or target companies, Adams indicated that such forecasting was difficult and often counter-productive in that it could limit potential opportunities.
“You’ve got to be opportunistic,” he said.
With no particular assets favoured over another, “as long as it’s a high quality team with a strong cultural alignment [with Challenger] and there is investor demand”, Adams said Challenger would consider any opportunity.
He said barely a week passed without the funds management arm of the business either making a partnership approach or themselves being approached by an external party interested in such a deal.
The positive outcomes generated by Challenger’s partnerships with Kinetic, Five Oceans, Greencape and Kapstream in the last 18 months have proved the effectiveness of such deals to the business and its investors.
Adams explained that in these partnerships, Challenger usually becomes a minority equity participant in the existing boutique, providing administration and RE services along with fee-based services, while the firm continues to operate on a stand-alone basis.
“We don’t expect to be able to do everything ourselves,” he said, pointing to global equity as one example of an area that Challenger doesn’t presently specialise in.
“Rather than pretend, we’d prefer to partner up.”
Recommended for you
There has been a “noticeable uptick” in the use of smart beta ETFs by advisers and sophisticated investors, according to Betashares, who are using the vehicles to take control of their portfolio construction.
The FSC has announced 15 proposals ahead of the federal election which it hopes will increase the competitiveness of Australia’s financial services sector, including six with a focus on fund managers.
Regal Funds Management saw total net inflows of $2.1 billion during 2024, with flows primarily going into long/short equities and multistrategy vehicles.
There is growing divergence between institutional and retail investors in their enthusiasm towards equities, according to Bank of America, with retail sentiment being “unusually low” at the start of 2025.
