Rothschild fund of funds team to move multi-managers away from growth bias
The £1bn in Rothschild Asset Management (RAM) multi-manager offerings is to be moved from a growth to a style-neutral basis.
The move, which coincides with the ongoing integration of new quantitative screens and risk management tools into its fund of funds process, will allow lead manager Bambos Hambi to tilt the portfolios towards growth or value, depending on market conditions.
Hambi, who joined RAM from Friends Ivory & Sime at the beginning of June, has also moved to divide analyst responsibilities along geographic lines between himself, his number two Marcus Brookes and analyst Alexandra Man, recently recruited from Bacon & Woodrow.
Hambi carries responsibility for every fund included in RAM's range of multi-manager products and he will personally look after funds in the UK and European arena.
Brooke will be responsible for funds investing in US, Asia and the emerging markets while Man will cover those investing in fixed interest and Japan.
Hambi said: 'The team here allowed exposure to growth in the past few years. What we have to do is be sure of all the risks we are taking, including style risk. For that reason, we will be broadly style neutral but with the ability to tilt the portfolios towards either growth or value depending on market conditions.'
This is being made possible, he said, by the new monitoring and quantitative systems being introduced. This includes extending the use of the Style Research software system, already used to monitor in-house funds, to style-map the multi-manager holdings. The system will closely monitor and backtest around 500 funds, not just current holdings but also those on RAM's reserve lists.
In addition, Hambi and Brookes have introduced correlation testing between funds, showing which have high correlation and are therefore effectively double holdings.
This will allow Hambi to reduce the number of holdings in each portfolio, including the £73m Five Arrows Independent Growth portfolio and the £20m Five Arrows Independent Income portfolio, from around 38 funds to nearer 26.
The final addition the team is introducing is a scoring system based on consistency of return, which they hope will enable them to reduce the volatility of RAM's multi-manager offerings.
The system, which is similar to the Lipper Leaders scoring system for consistency reported in Investment Week last week, looks at the quarterly returns for funds over five and three year periods and assigns them scores for consistency.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation