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Press Release – SWFI Survey of Public Funds Shows Strong Interest in Smart Beta

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FOR IMMEDIATE RELEASE

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  • Includes survey of 72 public institutions, including 16 SWFs, with over US$ 2.9 trillion in public investor capital represented.
  • Interviews with 8 asset owners from 8 different countries with combined AUM of over US$ 250 billion.
  • Additional research provided by four leading practitioner firms: Northern Trust Asset Management, State Street Global Advisors, Robeco and WisdomTree.

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SEATTLE, Wash. – 7 October 2014 – A survey of public investors conducted by the Sovereign Wealth Fund Institute indicates that adoption of smart beta strategies is growing globally.

Among the public institutions surveyed, 67% claim to already have smart beta allocations or are currently in the evaluation process. Of the sovereign wealth funds in the sample, 37% say that they have allocations, while another 25% say that they are currently evaluating a smart beta strategy.

In terms of popularity, fundamental and low volatility strategies outpace other approaches, being employed by 57% and 52% of those funds with smart beta investments, respectively.

The full survey results will appear in SWFI’s newly published Smart Beta: A Referential Guide for Institutional Investors. This report, sponsored by Northern Trust, Robeco, State Street Global Advisors and WisdomTree, marks the beginning of a new series of SWFI publications that compile research on specific asset classes to aid institutions in making investment decisions.

Smart Beta: A Referential Guide for Institutional Investors consists of a discussion of smart beta (what it is, why it works, advantages and disadvantages), a Q&A with 8 different public and private institutional investors and a survey of 72 public funds – including 16 sovereign wealth funds – asking about their perceptions and implementation of these strategies. A collection of research papers provided by the sponsors is interspersed throughout the guidebook to offer technical insight into the mechanics of smart beta and factor investing.

“The spread of smart beta strategies among public investors seems to be snowballing worldwide, especially among the larger and more sophisticated institutions like sovereign wealth funds,” said Jess Delaney, Research Director at SWFI. “Although the US and Europe are leading the charge, the results of our survey suggest that smart beta is making inroads with funds in the Middle East and Asia as well, and perhaps to a greater extent than previously reported by other financial media outlets.”

“SWFI is very excited about launching this new line of referential guides for institutional investors, beginning with the current issue on smart beta,” said Michael Maduell, CEO of SWFI. “We are honored to have had the opportunity to partner with some of the most prominent firms in the smart beta realm for this inaugural issue.”

About SWFI

The Sovereign Wealth Fund Institute is a global organization designed to study sovereign wealth funds, public pensions, central banks and other long-term public investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant topics. For more information about the SWFI, please go to www.swfi.com | www.swfinstitute.org.

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You can obtain a copy of the research and additional smart beta white papers here: swfi.com/smartbeta

For more information contact:
Vincent Berretta
Director of Marketing, SWFI
+1 (702) 768 – 0703
vberretta@swfinstitute.org

Crown Property Bureau Moves Assets to Thailand King Under 2017 Law

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In December 2016, Crown Prince Maha Vajiralongkorn became King of Thailand, succeeding his father King Bhumibol Adulyadej who passed away in October 2016. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Three Successful Traits in Asset Management CEOs

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by Michael Maduell

In my frequent and vast interactions with chief executives of small-to-large asset management firms, I’ve witnessed a number of traits that successful firms – meaning growing and retaining assets under management plus getting real respect in the industry – are able to properly execute. Besides generating amazing returns and matching the right solutions for the asset owner clients, CEOs need to be advancing their firms. Of course, quality client service should remain front of mind for fund management firms. In this short piece, I will focus on three traits that successful fund managers tend to possess.

1. Abundant Charisma from Founders
What is memorable and what will stick in one’s mind? A cadre of asset managers possess charismatic chief executives. BlackRock’s Larry Fink, DoubleLine’s Gundlach and Rajiv Jain of GQG Partners are some prime examples that come to mind. DoubleLine is a relatively new player compared to BlackRock and already amassed over US$ 100 billion in assets. Being a founder of the fund management company also helps, as CEO hires (often bringing a book-of-business contacts) may tend to look elsewhere unless generously compensated.

Having an effective cheerleader CEO is essential in nurturing and growing a sustainable franchise in a monochromatic industry of imitators. Too often, CEOs of some asset management firms are pure “salespeople” – too pushy or fake, or a highly-bright number-cruncher with low or nil emotional intelligence.

2. Not Drinking Too Much of One’s Own Kool-Aid
“We are a data-driven, technology, ESG-focused, smart-beta, solutions-led provider of services.” Hey, 2018 did I get that right?

Yes, your stuff does not stink. Like a broken clock, many CEOs rely on the flavor of the year or grappling a playbook, beating the idea over the heads of pensions and sovereign fund clients and prospects. In the long-run – meaning maintaining assets over a lengthy period of time – I find it’s better to be more objective when discussing potential strategies. I’m talking about a healthy dose of informative marketing. However, being overly-transparent or even talking yourself out of the strategy is not what I am directly advocating. It is important to be realistic about the strategy or thematic idea, as the attractiveness of these concepts shift over time.

3. Stirring up Controversy – Strategically
Shaking the tree and stirring the pot – this trait can surely backfire if not properly executed. Being the brightest crayon in the box can work. Even virtue signaling – latching onto a social current – can work in some instances, but CEOs that can deliver impactful counter-culture statements that shock the conscience tend to draw attention – and capital. This might not be the best example; however, upon the ascendancy of Abraaj Group, the firm’s founder, Arif Naqvi, often commented to not describe countries like China, India, etc. as emerging markets but as global growth markets – then creating a comparison to Wall Street and its risks. Abraaj was able to raise a ton of capital, before its downfall stemming from early 2018.

Boards need to diligently examine the CEOs they select. Does the firm want to grow or hold the line for the planned dividend? My belief is that if you are not growing, you are decaying, as the world moves faster and faster.

The views in this article are expressed by Michael Maduell.
Michael Maduell is President of SWFI.
www.swfinstitute.org

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SWFI First Read, June 16, 2018

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State Street Names Maria Cantillon for Head of Sectors Solutions, EMEA

State Street named Maria Cantillon as head of sectors solutions for Europe, Middle East and Africa (EMEA). She will report to Liz Nolan, CEO of EMEA at State Street. Cantillon replaces Joerg Ambrosius who moved to another role at the firm. Previously, Cantillon was Global Head of Alternative Asset Manager Solutions at State Street.

Theranos Founder Elizabeth Holmes and Ramesh Balwani Face Federal Charges

Elizabeth Holmes, the founder of blood-testing company Theranos, is facing federal fraud charges. Also facing charges is Ramesh “Sunny” Balwani. Both individuals were indicted on charges that they engaged in schemes to defraud investors, doctors and patients, according to the U.S. Department of Justice (DOJ). They both face two counts of conspiracy to commit wire fraud and nine counts of wire fraud. These criminal charges were levied after Holmes had settled civil fraud charges initiated by the U.S. Securities and Exchange Commission (SEC).

Russian Investors Chopped Treasury Holdings in April

Revealed in a report from the U.S. Treasury, Russian investors dropped U.S. Treasury holdings in March 2018 from US$ 96.1 billion to US$ 48.7 billion in April 2018. Before March 2018, U.S. Treasury holdings by Russian investors remained steady in the US$ 100 billion range.

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