Fund Management Advice

Backers wanting their stock portfolios to have less unstable income have been looking at family-owned companies set on profits as well as a sense of pride.

With the financial crisis of 2007-2009, global investors had negative experiences of the relaxing of risk attitudes, which led some fund managers to venture towards companies focusing on protecting family legacies.

Jose Luis Jimenez Guajardo-Fajardo, CEO of March Gestion, the fund management division of Spain’s Banca March said seeing parents work hard to grow a business meant that their employees would work hard to improve things and add value, so there is growth for future generations taking over the business.

Commercial governance experts have in the past been sniffy about family-run companies as they have shown an inclination to promote family over aptitude as well as the issue of family disputes. However, current evidence shows these businesses have a strong record on returns for investors.

Madrid-based IE Business School carried out a study which showed for every 1,000 euros put into a family company there is a 3,533 euro return over a decade to 2010 compared to 2,241 euros for businesses that were not run by a family.

In the IE study a family company was classed as where one family member or more sat on the board of directors and a family or individual held a minimum 20 percent share of the company.

The Spanish research backed up earlier findings from Jim Lee, a US academic. He found that U.S. family businesses typically showed 14 percent income growth and a 10 percent total profit margin in a decade to 2002, contrasted with 9 percent and 8 percent, in that order, for non-family firms.

In November 2011, Banca March built up its 31 million euro Family Business Fund based on research from IE and Lee.

Thomson Reuters data shows the fund yielded 22.7 percent in 2011 to July 31, weighed against 18 percent for Lipper Global Equity peer group funds.

The ten top performing resources include carmaker BMW (BMWG.DE), Switzerland’s Swatch Group (UHR.VX), Warren Buffett’s Berkshire Hathaway (BRKa.N) and German pharmaceuticals firm Roche (ROG.VX).

However some family businesses can be fraught with problems. There can be little or no planning for progression, arguments can arise around developing growth, especially if it risks diluting the family’s stake in the company or their assets.

Simon Wong, an independent advisor on corporate governance and adjunct professor of law at Northwestern University said that professionally run family businesses can be very successful but these types of investments are not without sizeable risks. He further pointed out that only 10-15 percent of family businesses continue to trade after three generations.

 

Young Fund Managers 2013

Private equity funds and hedge funds are cultivating young talent to stay on top of the financial market. The sector is seeing ever-younger financial experts taking to the investment floor, with recognition coming from prestigious publications such as Forbes.

On the recently acknowledged list are the young fund managers listed below, who have all been tipped for future success.

Manuel Stotz – THS Partners
Fund Manager
Joining THS Partners’ offices in London in 2011, Manuel Stotz manages a portfolio of $1.5 billion, focusing primarily on global equities. He garnered a BSc in Economics from the London School of Economics before working as an investor at Goldman Sachs Investment Partners, where he specialised in fundamental long and short equity and credit investment opportunities.

David Shankman – Blackstone Group
Vice President
Formerly of J.P. Morgan and Bear Stearns in the principal finance and asset backed securities departments, David Shankman joined Blackstone Group in 2009. He is now involved in the evaluation of hedge fund managers, and in the monitoring of portfolios and the determination of risks. He was instrumental in the launch of the Blackstone Strategic Opportunity hedge fund, worth over a billion dollars.

Jonathan Fayman – BlueBay Asset Management
Portfolio manager
Jonathan Fayman now co-manages BlueBay Asset Management’s global $1.3 billion macro hedge fund, having joined the company in 2009. His prior employment was at Rand Merchant Bank, where he was a prop trader for five years both in London and South Africa. His focus is on emerging markets and interest rates for currencies.

Ryan Fusaro – LionEye Capital Management
Analyst
After graduating from Fordham University, Ryan Fusaro’s passion for investment took him to Ramius Capital, a fund of funds. He then joined LionEye Capital Investment as an analyst, where his personal ideas for investment theory landed him the first place position at the Value Investing Congress yearly contest.

Jiayi Chen – Pine River Capital Management
Portfolio Manager
Jiayi Chen’s current role sees him as the co-portfolio manager of the Liquid Mortgage Fund at Pine River Capital Management, worth $1 billion. He came to the company in 2008, having previously held the position of an Analyst at the Beijing branch of Goldman Sachs Asset Management. He gained a BA in Mathematics at Tsinghua University and an MS in Statistics from Columbia University, and his career led him to join the rank of the Pine River partners in 2011.

Fund Management news

Standard Life Investments is losing a senior board member to lead insurance group Aviva’s fund management arm.

Euan Munro has been selected as chief executive for Aviva Investors. He previously controlled and led SLI’s fixed income and multi-asset management businesses and was a prominent member of its board.

Mr Munro will take up his new role with Aviva in January of next year.

Aviva group’s chief executive Mark Wilson will oversee Mr Munro who will come under his management and team.

John Misselbrook has temporarily been heading Aviva’s asset management business while the company has been planning and strategising reforms and changes within the business.

Mr Munro will take over from Mr Misselbrook and will continue to push forward the intended updates to slim down the company whilst upping profits.

He started at SLI in 1995 and was in charge of managing about $200bn (£131bn) of customer assets.

It was agreed by industry sources that the move was an important asset for Aviva.

The excellent history and experience Mr Munro brings to multi-asset management and fixed income projects combined with his insurance experience and knowledge were strong indicators. This background put him ahead of other candidates and led to his appointment as an outstanding choice for the business.

There are plans to raise profits for of Aviva Investors, which is a central element of the group.

It was said that Mr Munro will take on an essential role in pushing Aviva investors to take advantage of its capability and proficiency in overseeing its own funds. The strategy is to become a solid third party administrator and boost its role within the group.

Standard Life shares fell by a big 3% on Friday, in the first part of trading before recovering very slightly.

At the close of the financial year, Aviva Investors had £274bn worth of assets in its management.

Aviva Group provides over 34 million global customers with savings, investment products and insurance. Aviva claim to be the UK’s biggest insurer and one of Europe’s principal suppliers of general and life insurance.

General insurance is combined with asset management and life insurance businesses all under Aviva’s branding umbrella.

The Aviva Group is ranked as one of the UK’s top ten finance brands. Aviva falls within the top 10% of ethical businesses, taking a lead on worldwide social responsibility according to the Dow Jones Sustainability World Index. Last year, Aviva Group endowed £5.7m into UK neighbourhoods and groups. With a focus on positive contribution, one in three Aviva employees take part in community venture schemes which also meant staff volunteered over 30,000 hours.