Italy, and Europe, attract Fulcrum
Fulcrum Asset Management is looking to markets such as Italy to build its independent business beyond its existing UK and North American base.
Fulcrum Asset Management was launched as an independent asset management company in 2004 by Andrew Stevens and Gavyn Davies with whom Stevens had worked at Goldman Sachs for over a decade in the Equities and Investment Management divisions.
Some 80% of the manager’s current €1.8bn AUM comes from public pension
plans, while 20% is from charities. As Stevens also explains, the client base of the company is mainly institutional and, while the headquarters is in London, they have a strong presence in some public and corporate plans in North America, in both DB and DC pension schemes in the UK and in Australia.
“Half of our total assets are invested in diversified growth funds – both unitised and managed accounts – while the other half are in predominantly
absolute return strategies in a variety of asset classes, which are becoming increasingly popular among our clients.
“In addition to that, three years ago we started investing in Africa, where we currently have a fund which manages about $90m,” Stevens says.
In terms of investment strategy, on the diversified side Fulcrum’s managers
choose either a benchmark aware or an absolute return approach, according to clients’ risk appetite.
“Traditionally, UK investors have been more oriented towards equities, but some of them are becoming more conservative, moving into diversified
growth funds over recent years. More recently some have even begun rerisking given the level of bond yields,” Stevens adds.
Looking at fixed income investments, the company’s investment approach traditionally focuses on three key aspects: medium to long term fundamentals and asset classes; behavioural finance aspects; and hedging of the main portfolio risks.
“Our diversified growth approach is very important to us and the way we continue to add talented people to the team highlights our commitment
to this market. ‘Typically we invest in liquid asset classes, preferring not to hold individual securities but gaining exposure to countries, sectors and themes via low cost instruments’
“Similarly in fixed income we don’t believe in picking single cash bonds, adopting a benchmark-free approach, which has permitted our Fixed Income
strategist Andrew Bevan to capitalise on broader opportunities such as emerging markets investments,” Stevens explains.
Three years ago, Fulcrum decided to launch in the African investment space with Fulcrum Africa, a long-only fund that invests mainly in a portfolio of listed African equities. The fund focuses on the rapidly expanding domestic economies of frontier markets, with exposure to sectors such as financials, consumer goods, construction and telecommunications.
The investment is deemed suitable for long-term investors who are seeking to realise capital gains arising from Africa’s sustained economic growth, Stevens explains.
The Africa strategy is available in two fund formats: Cayman domiciled and Ucits. The Cayman fund adopts the same investment philosophy as the Ucits fund.
Stevens says, the African market has proven to be particularly successful for
Fulcrum thanks to attractive demographics, improvements in rate of inflation, and political stability.
“Our African equity fund holds around 35-45 individual companies and invests in Frontier Africa including Nigeria, Kenya and Ghana, while, Zimbabwe and Tunisia have started to become very interesting markets as well. African markets have been undoubtedly some of the best performers in the world over the last few years and we believe this should continue.”
Looking at future challenges, Stevens says that Fulcrum AM now has the
right numbers to expand its European client base. As for now, Italy and Spain seem to be the most attractive markets for the firm, but Stevens says they are also starting to look at Germany and France.
Asked if penetrating such markets is going to be difficult for regulatory reasons, Fulcrum’s CEO says that all of their products are available in Ucits form.
Commenting on the likely type of clients being attracted, Stevens says:”Those investors who can have medium to long term investment horizons and are able to allocate between $10m and $40m would be our ideal clients. In Spain and Italy for example such client opportunities seem to be mainly insurers, wealth managers and private banks.”