HEAD-TO-HEAD: Blackrock versus Capital Group

123456

MANAGER REVIEW

“The team set-ups are very dissimilar,” said Möttölä.

The Blackrock fund is run by the London- based Diversified Strategies Group and the two lead managers are Jason Byrom and Colin McKenzie

They came on in May 2018 after Andrew Warwick left for BNY Mellon, and it is “still early days to gain conviction about their skills as co-lead managers, especially considering that the process was changed in early 2019,” said Möttölä.

Of the two, derivatives specialist Jason Byrom has a long background at Blackrock, which he rejoined in 2015 after a few years elsewhere.

“Limiting our conviction slightly is the fact that Byrom has no public track record before being named on this and some other funds in May 2018,” said Möttölä.

The other named manager is Conan McKenzie, who serves as the ESG expert within the team. He joined Blackrock in 2011 and has worked as a portfolio manager since 2012. Supporting the duo is a team of experts within research, strategy, and implementation that is “reasonably well sized, but it has seen some turnover lower in the ranks in 2020,” according to Möttölä.

The seven-strong research team produces trade ideas and views on their asset classes, while the four-member strategy team makes sure portfolio management decisions are based on a solid understanding of the macro and market environment.

“But, the level of experience is less impressive than at the Capital Group fund, with Byrom being at this portfolio management team since 2015 and McKenzie since 2012,” said Möttölä.

Turning to Capital Group, six named managers each run separate slices of the portfolio. The managers are industry veterans with an average of 28 years’ professional experience and 23 years’ tenure at Capital Group.

“As is the case across Capital Group’s funds more generally, the global allocation’s team consists of a number of individually operating fund managers, and the end-result reflects their combined views,” he said.

“Four of the managers invest with a global allocation mandate, while two managers use only bonds in their portfolios. Geneva-based Paul Flynn heads the team, but each manager makes their own investment calls,” he noted.

They are supported by Capital Group’s large and experienced research team, and Möttölä especially likes the managers’ incentive scheme, which puts high weight on long-term risk-adjusted performance.

Besides running one of the balanced sleeves, Flynn holds the additional role of principal investment officer, providing oversight and tracking results and risk at the strategy level. He is also a member of Capital’s investment committee, which decides on changes to the underlying strategies. The other balanced sleeves are run by Hilda Applbaum, Tomonori Tani, and Anirudh Samsi.

The fixed-income sleeves are managed by Robert Neithart and Thomas Høgh, who in January 2019 replaced Mark Brett

“The strength of the setup is that there’s no individual manager whose views can make or break the fund; All of the managers at the fund are very experienced and are supported by a vast research organisation,” said Möttölä.

“Our view is clearly more favorable about Capital Group than Blackrock regarding management strength,” concluded Möttölä.

123456