Low interest rates and poor yield are pushing institutional investors towards asset managers that consider specific risk parameters and target performance outcome, says Omega Global Investors.
Large investors are increasingly seeking mandates that are co-designed in direct collaboration with asset managers, said Omega Global Investors managing director George Vassos.
“We see a distinct trend has emerged whereby investment managers and large funds are talking directly to solve and co-create outcomes-based solutions, often across multi-asset class and risk parameters,” Mr Vassos said.
“This investment co-design trend speaks to a number of systemic industry responses as Australia’s growing asset pool looks for new sources of risk-adjusted portfolio returns.
“The underlying trend to in-source research and manager selection is part of this shift, and signals a welcome broadening and maturing of the institutional marketplace,” he said.
Mr Vassos said that while the trend will not threaten the traditional intermediated manager selection process, it points to a renewed effort to explore options that search for risk-adjusted return outcomes.
“Strategic partnerships look to remain a permanent fixture as institutional investors also seek to differentiate and diversify their asset allocation processes and we welcome the positive spirit in which the industry has embraced the growing trend,” he said.