UK - Baring Asset Management (BAM) is changing the way it runs its European equity funds, assigning credit specialists to the European equities team and increasing the evaluation of credit factors when assessing stocks.
BAM claims that the restructuring is in response to the increasing speed at which investment decisions are taken. Jan Mantel, the firm's head of UK and European equities, said: “With these levels of volatility, traditional methods of management are less appropriate.”
Mantel said BAM had introduced twice-daily meetings on the markets and also split the roles of analyst and fund manager. The firm now has a team of 12 buy-side analysts supporting fund managers. To react at speed to stocks which can move in value by 40% over a few days, we are conducting more research in the first stages of the investment process as well as fixing buy and sell levels earlier on.” BAM has also introduced a new risk control process to check weekly for style tracking error. This is part of the strategy of not sticking to either a value or growth style, but to buy into growth surprises.
Mantel added a European recovery looks likely because investors who bought equities in October 1987 and 1999, when the bond/equity ratio fell to a level similar to now, enjoyed positive returns one to two years later.
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