Hedge fund skills to drive long-only investments
The head of BT Funds head of mezzanine and networks business, Murray Harris, is keen to set the record straight on the change in managers from Putnam to AQR Capital Management.
Tuesday, June 27th 2006, 8:05AM
BT had been disappointed with Putnam’s performance as it had failed to achieve its goal of outperforming the benchmark by 3% annually over a three-year period.
He says the analysts were doing a good job, but the portfolio managers had let things down.
The transfer of assets to the new manager happened earlier this month.
Harris says in New Zealand BT is currently picking up wholesale mandates and has also been getting positive funds flow and performance figures.
AQR is an interesting business as it is built around a strong hedge fund franchise and strong academic talents. AQR have built up their reputation around its hedge fund business, where it is one of the biggest in the world with more than US$8 billion under management. However, BT is not taking them on to use their hedge funds, rather they are using the smaller, more traditional asset management side of the AQR.
AQR founding principal David Kabiller says that to build a long-term balanced business they have to offer long-only management skills as well as their hedge fund products.
The advantage AQR has is that hedge fund management is an “extremely powerful” tool for attracting talent.
With this talent on board it has developed strong asset management and administration tools for the long-only business.
He says AQR has a unique way to trade in the markets after it developed its own direct access trading platform, which helps it keep costs down.
As for the firm’s style it is described as a value/momentum style based on a huge amount of research.
AQR “synthesize this data to get coherent views and manage risk,” he says.
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