Schroders’ awesome foursome

Schroder Investment Management will keep wearing its crown for at least another year after the company took out the Money Management/Lonsec Fund Manager of the Year title for the fourth consecutive time.

The award was presented to Schroders chief executive officer Greg Cooper at the awards night in Sydney, which also marked 25 years since the establishment of Money Management.

The victory follows the investment manager rating well across the board over the last 12 months, according to Lonsec, and excelling in several asset classes. The researcher praised Schroders for its “strong risk management focus and advanced portfolio construction techniques”.

But for Cooper, Schroders’ success can be attributed to two things: long-term strategy and Schroders’ people.

“Partly it comes down to having the right sort of people and culture – that’s basically what funds management is, it’s about people,” Cooper said.

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“What we look for are people who are inquisitive, who want to question the status quo and ask ‘why?’,” he added. “I think that’s one of the characteristics that make a good analyst and a good portfolio manager over time.”

Furthermore, with plenty of competition out there in the marketplace, outperformance often comes down to how one can differentiate oneself from others.

“Often that means getting people who are prepared to think in a non-consensus way and come up with non-consensus views,” Cooper said.

As for its investment philosophy, Schroders generally applies a benchmark-unaware, long-term view.

“We generally think benchmarks are quite poor indicators – be it risk or the correct structure of a portfolio,” Cooper said.

“If it’s Aussie equities, we focus on quality growth companies; if it’s fixed interest, we have a top-down macro view of the world; if you follow that down into the balanced fund – from an asset allocation perspective – again, we don’t get too bogged down in benchmarks.”

The secret to success is figuring out what the real drivers are over the next three to five years, basing the investment premise around that and not getting caught up in the short-term noise, Cooper said.

Though it sounds simple enough, the execution of such strategies is easier said than done. Ever since the start of the global financial crisis and subsequent disappointing returns, investment managers have had a tough few years trying to regain investor confidence.

But long-term views with true diversification seem to be a trend with our top three managers.

Alongside Schroders, BT Investment Management (BTIM) and Magellan Financial Group Australia also made the shortlist for this year’s top title.

BTIM’s resilience during a tough financial period and its multi-boutique model are attributed to the company’s success over the past 12 months.

“We promote a culture of challenging one’s thoughts; it’s not all about the return, it’s also about ensuring that you understand the risk that you take and being risk-aware,” said Emilio Gonzalez, BTIM’s managing director and chief executive.

While Schroders’ shortlisting was no big surprise, Gonzalez also praised Magellan for playing the global game right. Both BTIM and Schroders are similar, in that they fall into the broader capability type of managers.

“I think it is good to see an organisation like Magellan – an Australian company – doing well managing overseas equities,” he said.

“I think that’s significant, it demonstrates that we can play on the global stage in terms of returns, because they’re very much competing against many global managers.”

Head of distribution at Magellan Frank Casarotti said the group’s place in the finals is recognition that Magellan is on the right track.

“We aim to generate long-term returns for investors, reduce volatility, and so far – as we’re approaching the fifth anniversary of the fund – we’ve been able to achieve decent results,” Casarotti said.

This year’s winner – Schroders – has been nominated in four other categories for 2012, taking the top spot in three.