Manuela Thies is currently head of multi management at Allianz Global Investors (Allianz GI), she coordinates a team of 8 fund selectors in the Fund of Fund segment for Allianz Global Investors (Allianz GI), with an AUM of €15bn.
“Our team conducts both fund research and portfolio management” she explains. “I know of other institutions who prefer to keep the research and portfolio management aspects separate. For us, the rationale behind combining these task is the importance to fully understand the products we invest in in order to select the funds which fit into our asset allocation view in the best way” Thies highlights.
In terms of investment strategy, the team invests mainly in actively managed products. “There are certain market segments or phases where it does make sense to use a passive strategy, for example Index Futures or ETF’s in US Equities. While other fund companies offer Fund of Funds which are completely focussed on passive investing, we focus on active strategies with Alpha potential” she says.
When it comes to souring new investment opportunities, the team distinguishes between an initial, quantitative stage, and a second, qualitative stage. “Our selection process is highly structured, starting with an initial quantitative analysis where we rank funds within their peer groups, we call this quant scoring. We assess how the fund behaves in different market environments on relative and absolute basis and analyse its risk level in relation to returns.”
“The key emphasis lies with the qualitative due diligence which includes detailed requests for proposal and interviews with the fund management. Our internal qualitative rating has a very substantial descriptive part. What does the fund look like, for how long has the fund manager been with the fund. At this stage in our evaluation, we grade the criteria from 1 to 5, have defined certain KO signs, or red flags, 1 being the lowest grade. It doesn’t matter how good the returns or other factors are, if we have to grade the fund with a 1 in a certain category, we won’t invest in it” she explains.
These KO criteria are multiple. To give three examples: first, the level of transparency, are our surveys being returned, is the company available for further information. Second is consistency in fund management. It is important to distinguish between funds that are run using a star approach and funds with a team approach. If the fund is based on a team approach, then we would hardly follow the manager. If a fund has a star approach and the manager then leaves suddenly, we would be very wary, and if we are invested, we would consider following him, and we have done so in the past. Third is the cost aspect, it is important that we consider the fund to be fairly prized.”
As a result of the crisis and the current low return environment, key changes in client demands can be deducted“We are increasingly considering alternatives and absolute return strategies” says Thies. At the same time, risk control is a key factor. “If we see double digit returns we would be wary as we generally prefer market neutral and risk controlled strategies. ” says Thies. All of the products we consider in our Fund of Funds are UCITS compliant, which is why we have not been directly affected by the AIFMD deadline.”
“I do not have a crystal bowl but there are some key changes in demand which can be deducted. I think there is a transition from individual asset classes to multi asset products. The market corrections in 2008 have redirected investor’s attention on the aspect of risk controlling and the need for further diversification and new products” says Thies.
“I do not have a crystal bowl but there are some key changes in demand which can be deducted. We have seen a demand transition from individual asset classes to multi asset products. The market corrections in 2008 have redirected investor’s attention on the aspect of risk controlling and the need for further diversification and new products. ” says Thies.
“This is particularly interesting for us in the Fund of Fund segment, because we have a greater level of flexibility to respond to the increasing demand for diversification and new products” Thies concludes.