Scottish Boutique Fund Manager invests in Australia 23 March 2009 Martin Currie Investment Management, the independent Edinburgh-based specialist equity boutique, has set up business in Australia. Andy Sowerby, Martin Currie’s Managing Director for Sales, Marketing and Client Services, first identified Australia for expansion in 2006. “The Australian market is strategically very important for us,” he says. “The opportunity for Martin Currie is there because of the market dynamics – the high level of investor sophistication and a strong equity culture.” He believes that the demand for international investing from Australia will continue to grow, both because of capacity issues in the domestic market and because of an ongoing need to diversify. Martin Currie opened in Melbourne in mid-2008 and Kimon Kouryialas was appointed as Country Head for the Australian operation. A centralised approach to funds management With a centralised approach to funds management, Martin Currie’s Edinburgh-based funds management team covers products which include absolute return funds, as well as multi-regional and specialist equity portfolios. Martin Currie’s flagship product – its ‘global alpha strategy’– is a high-conviction 30 to 45 stock portfolio aimed at outperforming its index, plus an extra four to five per cent per annum measured over rolling three-year periods. Mr Kouryialas says that the firm needed to make what he termed ‘a proper commitment’ to the region, so Martin Currie has launched an Australian dollar unit trust using Equity Trustees as the responsible entity, and launched a hedged and unhedged version of the ‘global alpha strategy’. While Martin Currie currently provides services to the institutional market in Australia, Mr Kouryialas says that the firm plans to make the ‘global alpha strategy’ product available to retail investors through key platforms over time. A unique ‘Big Boutique’ Martin Currie is often called the ‘Big Boutique’ because of the size of the company – A$20 billion in funds under management – and the way it operates. The business was established in 1881 and today is owned by its 260 employees. “Every one of our employees is a shareholder – from the lady in reception to the CEO,” explains Mr Sowerby. “The CEO can hold the most shares, but even here there is a cap at five per cent.” He says that it is unusual for a fund management company of this size to be owned entirely by its employees, “but it does give us some unique advantages. For example, if we have to make the hard decisions, we can – and everyone has a part in that as both a shareholder and an employee.” When the company presciently observed storm clouds gathering over the economic horizon in early 2008 it chose to suspend bonuses for all staff. This decision was only possible because of the company’s ownership structure, with staff electing to keep the firm intact to protect the client proposition. “We have been able to reduce our costs by 40 per cent over the past two years,” Mr Sowerby reports, “which puts us in a very good position right now.” Kimon Kouryialas says that in this time of economic uncertainty the market is going back to basics. “The end user is not looking for sophisticated products at the moment. I think we’re tending towards ‘buy and hold’ equity investing, with a focus on simple, transparent equity based products,” he notes. “Clearly, we’re in a very difficult market, but we’re not concerned with short term profitability. We don’t have a short term focus – we work on a five to ten year view – and, indeed, we see this period as a time to further develop our business. Fortunately, our business model allows us this leeway.” Why Australia was chosen Mr Kouryialas explains that Australia was chosen for investment by Martin Currie because it has a sophisticated investment market, dominant equity culture and the ease of common traditions and language. “Most importantly,” he observes, “Australia has the highest per capita savings globally with one of the largest and most developed savings markets in the world. This is because Australia is one of the few countries in the world with compulsory savings in the form of superannuation.” Mr Sowerby says that the Australian office is part of Martin Currie’s strategy to service its global clients locally. “And Austrade’s guidance and support during the setting-up phase proved to be invaluable,” he adds. “The Austrade office in London was a great help in the early phase of our project. They assisted with information and advice which helped us assess the opportunities available in the Australian market.” Expansion into Asia Martin Currie’s office in Melbourne will be used as a base to manage and support expansion into Asia. “We recognise that this will be one of the major growth areas of the world,” Mr Kouryialas says. “Our expansion strategy is to look at markets where we see long term demand for our capabilities and put sales and client services people on the ground in those markets.” “We are about to put someone in place in either Hong Kong or Singapore and are already in search mode on this. We also plan to open up in Switzerland and these new offices will complement our client service and sales teams in London, New York – and, of course, Melbourne.” More information |