A blockbuster fund can be both a blessing and a curse, as Phil Barker, Standard Life Investment’s global head of sales, knows well. While the famous – and enormous – Global Absolute Return Strategies (Gars) fund continues to be at the heart of SLI’s success, Barker has had to broaden SLI’s appeal both into different variants of absolute return as well as further afield.
“In recent times, fund selectors have started to demand different flavours of absolute return,” says Barker. “As they got under the skin of these funds, they started looking to differentiate – to combine two or three different sorts of absolute return funds.”
One place SLI has found success is in its range of unconstrained equity funds, run by Mikhail Zverev. “Wholesale investors in Spain and Italy like unconstrained equity,” he says. “Selectors are not so much looking for uncorrelated assets but more for non-index tracker funds to complement any passives they hold.”
Elsewhere, the core demand is for bonds. “Since we started in Europe, we’ve seen good support for European credit from a wide range of investors, and that continues to this day,” explains Barker.
“In Germany in particular, which is a key market for us, there is continued interest in low-risk fixed-income investments for a low-inflationary environment. That is to say both traditional fixed income – European credit, global credit – and also absolute return global bond funds.”
In recent months, Barker has seen a surge in interest, specifically in high yield. “Commodities is something we are now looking at, although we aren’t active yet,” he says.
Another asset class he is interested in, although SLI is not yet developing anything in this area, is infrastructure. “We’ve already got real estate and a private equity business and multi-asset. But the whole area of infrastructure, the idea of making it more available in a liquid form to the wholesale market, is one that, from a personal point of view, I would like to see in our armoury.”
But while it has had some success in credit, absolute return bonds and unconstrained equity, the core success of SLI in Europe remains its multi-asset range.
Gars is a widely bought product but if you look under the bonnet, it is very sophisticated, more like a global macro fund than any regular multi-asset fund you might find. Do fund selectors really understand what they are getting? According to Barker, the key is they understand what the outcomes of the fund are in terms of its behaviour.