Despite a possible double-dip US recession, further negative returns and a change of ownership - it's business as usual for BT Funds Management. BT Funds non-executive director Terry Power spent much of last week's investor roadshow reassuring investors the company’s A$900m acquisition by Westpac won’t affect the local team - its autonomy or its investment philosophy.
Westpac’s BT purchase follows the bank’s recent acquisition of Rothschild. BT will be retained by Westpac as an investment management subsidiary under its own brand and Craig Stobo will remain its chief executive.
Power admits that Westpac clearly wouldn’t have been the best buyer of BT when it first expressed interest in acquiring the fund manager three years ago. What’s different now argues Power is the costly lessons rival Australian banks have had to swallow.
He says financial institutions now recognise the importance of keeping banking and fund manager cultures entirely separate.
Power expects Westpac managed funds to be made available via BT Funds Management.
Power expects the Westpac ownership to foreshadow some significant changes. In addition to appointing additional external global investment managers, BT and Westpac teams will combine to boost resources.
Despite BT’s poor returns on global equities – down -14.51% and -17.12% in 2001 and 2002 respectively, Power says there was the notable lack of hostility from attendees to its first major road show in three years. After the initial market shocks over 12 months ago, he suspects investors are considerably more realistic about returns going forward.
He expects a rationalisation of funds, following the BT transition to lead to a much more varied product range. "Preferring to buy and hold, investment managers generally haven’t implemented strategies to make money on the downside. Once the dust settles in the market and fund managers’ fully assess where they went wrong, we’re likely to see new types of funds that will take those risks and leverage funds under management."
What’s likely to spur fund managers’ to offer these positions, says Power is a protracted period of negative returns.
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