Year-End Job Moves Pile Up at Asset Managers

(December 18, 2013) – The new year will bring new jobs for many in the asset management and servicing industry.

State Street Global Advisors (SSgA) has dropped another hint that it’s pushing hard to be the default defined contribution firm of the future by hiring Alliance Bernstein's head of product and partner strategy Mark Fortier.

Fortier will serve as managing director and head of global defined contribution research and product development at SSgA. The firm has previously had a significant focus on viable retirement income products, but hiring Fortier suggests it is also making a serious investment in project.

Elsewhere, infrastructure specialist AMP Capital has lost its CIO David Kiddie, but will have two new appointees joining its leadership January 1. Kiddie started in 2009, and has decided to return to the UK to rejoin his family, according to AMP.

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In addition, Sean Henaghan--who has been with the Australia-based firm since 2006--will become head of its multi-asset group. He is being promoted from head of the multi-manager and investment solutions team. Fixed-income chief Mark Beardow has also been given the nod to take over all of AMP’s specialist investment teams.

A new CIO had not been announced by AMP at the time of writing.

OppenheimerFunds, in contrast, does have a new chief investment officer. Current CIO Arthur Steinmetz will move into the chief executive slot, while CIO of fixed income Krishna Memani has earned Steinmetz’s prior position. The departing chief executive William Glavin will remain on as chairman.

For one asset management firm, moves haven’t been in the leadership team, but rather the entire company. Legal & General Investment Management America, which specializes in liability-driven investing, has grown out of its offices and will be moving to a new space in downtown Chicago.

“We have wanted to move to the downtown area for some time, but wanted to make sure that we found the right space before moving,” said CEO Mike Cranston. “As the company continued to expand and our client roster grew, it became evident that we needed an office that aligned with the next phase of our US plan.”

(December 18, 2013) — A divergent trend in developing and emerging markets’ (EM) risks marked a significant change in how investors allocated to EM assets, according to Axioma.

Melissa Brown, senior director of applied research at Axioma, concluded that market risk peaked in the second quarter of 013—a result of tapering talks by the US Federal Reserve.

“Although it was a ‘risk off’ for many investors at mid-year, large cap US stocks ended up having their best year since 2003, despite the government shutdown, with consumer discretionary stocks leading the way,” Brown told aiCIO.

Emerging markets took a bigger hit from the Fed’s announcement—its recent decline in risk has been steeper, leading to a wider gap between developing and emerging markets.

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The risk, Brown found, had mainly shifted eastward to Asia-Pacific markets. While North American and European markets’ risk fell after the second quarter, Asian markets had largely remained flat.

“One of the most significant trends of 2013 was the continued decoupling of developing markets from emerging markets,” Brown said. “We saw it across the board, in equity, bond, currency, and credit default swap markets. The divergence of risk and return had major investor implications in terms of stock and country selection in emerging markets.”

This trend led investors to be more discerning with their allocations in emerging markets: they could no longer be tied together as one unit.

“Lower correlations, along with the changes in risk geographically, resulted in investors becoming much more discriminating,” Brown said. “In the absence of a single overarching theme driving returns, investors placed their bets based on the individual merits of countries and individual assets within countries.”

These lower factor and asset correlations helped decrease risk in developed markets but less so in emerging markets, as high factor volatility could counterbalance the decline.

Brown said looking ahead, one could expect country selection in emerging markets to become critically important. However, understanding the risks undertaken for each individual countries should also play a greater part:

“You want to make sure that you’re in the right countries, estimating the risk properly for the markets you’re in in,” Brown told aiCIO.

“Volatility typically follows volatility. The chances are it’s going to be a while until the risks settle down.”