Featured Profile: Rachel Farrell
A pedigree in global markets
From private wealth investing in Geneva to institutional investing in Singapore, Rachel Farrell has taken her global experience to Australia as the new country head for J.P. Morgan Asset Management. Darren Snyder writes.

Rachel Farrell was recruited to work at Bloomingdale's straight out of US college and little did she know the global retail institution would point her to a career at some of the world's largest investment managers.

From her New York base Farrell went from the department store to business school and developed a keen interest in capital markets.

You're selling a product that has no limitation and all the power of creativity.
"I discovered investment products, and I thought 'now we're talking'. You're selling a product that has no limitation and all the power of creativity. It's not a physical product and I was fascinated by that," Farrell says.

She also knew this newfound interest would answer global career ambitions. And after working as an investment manager across several countries and continents for more than 25 years, this year Farrell arrived in Australia as country head and chief executive at J.P. Morgan Asset Management.

In her prior role as the firm's head of sovereign and institutional Asia Pacific ex-Japan, Farrell was based in Hong Kong and heavily involved in discussion about moving away from regional management models to country-specific leadership. It became apparent Australia would need to appoint a chief executive and the experienced manager put her hand up.

Moving to Australia in March, Farrell describes the local market as "very sophisticated."

"People really understand the investments they're making, whether that is distributors on the retail side or superannuation funds," she says.

Farrell knows not every JPMAM product will suit the Australian market and she is conscious of the continuing fee pressures. She says all investors in the local market are looking for cheaper ways of building liquid, alternative uncorrelated exposure and one of the products addressing this need is the JPMorgan Systematic Alpha Fund - the 2017 Financial Standard Max Awards Investment Product of the Year.

"We launched that in 2008 [2015 in Australia], so really quite a long time ago and it had been this best kept secret and it's becoming more increasingly visible all over the world now," Farrell says.

"Particularly in Australia where people ask, 'how do you build an exposure to alternative risk premia at a low cost fashion and in a liquid, low-cost, transparent fashion?'

The Systematic Alpha Fund and its ability to capture components of hedge fund returns, otherwise known as hedge fund beta, is closely tied to many of the products the chief executive has distributed to high-net-worth and institutional investors across the world.

Straight out of business school in the US during the early 90s, Farrell landed a role at Bankers Trust. After rotating quickly through a couple of areas she quickly found herself a home in the asset management business.

After running global discretionary portfolios for the high-net-worth business, Farrell then moved to Geneva, Switzerland as a portfolio manager. She stayed for about 10 years until the business was acquired by Deutcshe, moving in to a role at Citi.

During her 12 years at Citi, Farrell originally started in the private bank and worked in Geneva. There she helped build out a real estate investment business, a private equity fund of fund business, and the expansion of a number of several hedge funds.

"I was taken by the alternatives world - which had the full degrees of freedom, it was the most sophisticated," Farrell explains.

After about 10 years working in Switzerland, Citi offered Farrell a position in Asia with a much bigger business book.

In her role as managing director for Citi Alternatives Investments, later based in Singapore, Farrell tells of a time when she was heavily involved in distributing John Paulson's hedge funds - a manager that essentially predicted the Global Financial Crisis.

"In a way I saw this thing coming because I was explaining to all these HNW investors what was going on in the US mortgage market - I don't think anybody realised just how much impact it would ultimately have," she says.

"It was pretty clear - Paulson early on built this picture of how much leverage there was in these structured products, built on mortgages, and how unrealistic they were in terms of around defaults."

Citi then offered her a role in Asia where the firm had a solid distribution capability.

"I had more kids in tow at this point and we moved to Asia," she says.

Around 2005 several sovereign wealth funds were starting in Asia and the pension funds "were just starting to look to invest outside of their local markets."

Farrell recalls Citi had started to investigate whether its own proprietary alternative investment capabilities would be suitable for those types of clients "and they asked me to initiate that coverage in Asia. In 2006 I moved from HNW investors to covering institutional investors."

She describes the move into the Asian institutional market as captivating, practically meeting the sovereign wealth funds on Day One of their existence.

"I met these guys when they were like three people in the office and now they're huge, multiple-hundred person teams," she says.

Following the fallout of the GFC and circa 2009, Citi made a conscious decision to exit several of its non-core businesses and alternative investments was one of them. Farrell said this was largely because Citi could no longer have its proprietary capital sitting alongside client capital, it needed to be aligned.

What it also did was present an opportunity and Farrell was on the radar of J.P. Morgan Asset Management in Singapore. She joined in 2011 to oversee the south-east Asia book of business but with an understanding that she would grow her portfolio, ultimately being trained for the head of Asia-Pacific ex-Japan for the institutional market.

Now Farrell's remit is to grow the asset manager's Australian business. Acutely aware of J.P. Morgan's global reach, the newly-minted country head knows not everything will work Down Under, and there will be a suite of products particularly useful to the insto and retail markets.

Post-retirement is one crucial area Farrell can see the Australian arm developing stronger relationships with the insto market.

"We've done analysis on spending patterns and focus groups on what people want in retirement," she says.

"We've created a product that takes into account spending patterns, takes into account the market performance, takes into account future outlook of market performance and guides people what they can take out of their lump sum every year."

Farrell acknowledges Australia is a extremely competitive market and "is a magnet for global expertise."

"You have to make sure what you bring to market here is really the best - you'd always want to do that but the market here is very discerning."

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