Superannuation
Industry fund awards emerging markets mandate

An investment manager fast approaching US$10 billion in assets under management and advice recently won an emerging markets equities mandate from an industry superannuation fund.

ClariVest Asset Management will manage the $75 million mandate from the Australian Catholic Superannuation and Retirement Fund. It marks ClariVest's second emerging markets mandate in Australia in recent times after having won an EM mandate from NGS Super in 2016.

Australian Catholic Superannuation and Retirement Fund (ACSRF) chief executive Greg Cantor said the mandate was awarded following a global search for active emerging markets equity managers.

He said the mandate supplements and diversifies the $7 billion fund's exposure in EM. According to Rainmaker Information, ACSRF had more than $1.7 billion or 21% of its total AUM dedicated to international equities as at 31 December 2017.

ClariVest chief executive and chief investment officer Stacey Nutt believes the firm was chosen on the basis it wasn't heavily correlated with other emerging markets managers.

He said institutional investors can often find themselves in a position where majority of returns are coming from a particular investment style - and they don't want to pay for it or something which can be explained largely from beta exposures.

The San Diego-based asset manager asset takes a single behavioural approach to managing money across a variety of equity markets. Its approach often crosses many of the boundaries implied by various pre-defined investment styles, Nutt said.

He believes there's two issues top of mind in emerging markets.

"One is related to this growth, momentum market that the global markets have been in," Nutt said.

"There is this feeling we're in an old bull market, and a long momentum cycle that's gone on for way too long, and at any moment it can fall apart."

He argues emerging markets are in a much newer, bull momentum and growth market. About three years ago emerging markets were "having a really tough time - momentum was horrible, growth was bad and the asset class was in really bad shape."

In the last two and two-and-a-half years this has turned around, Nutt said.

"The drivers of that growth and momentum are really fascinating this time around. Emerging market stocks are being driven by intra-EM growth, not from non-EM consumer demand," he said.

"They're being driven much more by local or regional demand and that's a whole different ball game. It's a much more sustainable growth story for emerging markets."

Read more: EMemerging marketsmandateinvestmentsuperannuationAustraliaClariVestAustralian Catholic SuperannuationACSRFStacey NuttGreg CantorNGS SuperRainmaker InformationSan Diego
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