AMP Capital is planning to shift its funds management processes away from benchmark-focused investment objectives to more outcome-focused objectives.
"The . transition that we are focusing on is moving away from a very strong focus on benchmark-plus-type management to more outcome-orientated investment management," AMP Capital managing director Stephen Dunne said yesterday at a media briefing.
Dunne said the current investment climate warranted a move away from relative targets to more absolute returns.
"[It] reflects the backdrop we are investing in, which is a marketplace that is characterised by lower returns, more volatility and an environment where we step back and look at how we run funds and what the clients really want from us as the investment manager," he said.
"This is about: 'Here is the level of return that I'm after as an investor, and I want you to minimise the volatility around that return.'"
AMP Capital started on this strategy with the introduction of a multi-asset fund last year, which replaced the previous balanced fund approach.
The multi-asset fund targets a consumer price index plus 5.5 per cent over a three to five-year rolling return period.
The fund currently has just $350 million in funds under management from retail and institutional clients, but Dunne said he would like to see more planners obtain authorisation to advise on the product.
"Certainly, from our perspective, we work with the broader AMP Group to position it across the portfolios, progressively getting the planner groups authorised to sell it," he said.
"We are at 10 per cent at the moment. We would like to get ultimately 100 per cent of them authorised to give advice on these funds. It is a core focus for this business going forward."
AMP Capital would also introduce new outcome-orientated products, he said.
"In terms of our product range, you will see more outcome-orientated products come to the market over the years," he said.
"We would also like to bring out a capital stable version and a high-growth version that is focused on outcome orientation."
He also indicated the concept might be expanded outside of AMP's diversified funds and pointed to its corporate bond fund, where investors aim for an income level.
Last year, industry fund QSuper also indicated it would move away from relative returns and address the problem of peer risk in the industry.
But unlike QSuper, AMP Capital will not stop participating in surveys, but rather seek to work with research houses on adequate reporting.
Dunne said that in general peer risk was likely to heighten as the Australian Prudential Regulation Authority would start to report quarterly investment returns of superannuation fund options.
"The more surveys you have, the more it embeds the emphasis on short-term results," he said.
He acknowledged that moving away from benchmarks was a somewhat risky move for the company.
"It is a higher business risk, because you are trying to change how people are investing and how the [wealth management] system is set up," he said.
"But going forward it makes more sense to invest with an outcome in mind, rather than a benchmark in mind.
"Right now, we have pushed a significant amount of the risk onto the investor."
