AMP Capital overhauls equities business

AMP Capital will overhaul its $12bn Australian equities unit to focus more on a lower-cost, computerised strategy.

AMP Capital is revamping its Australian equities business. Pic: AAP

AMP Capital has announced an overhaul of its Australian equities business to focus more on a lower-cost systematic, or computerised, investment strategy, as well as on so-called “active” strategies in equity income and small companies.

The equities business team, which manages $12 billion in Australian equities, will be restructured into equity income, small caps and systematic functions, in a move the company says is the latest step in “modernising” AMP’s equities capability.

The revamp at one of Australia’s biggest wealth managers follows a review, and was foreshadowed in The Australian today.

A number of key positions will be lost. Initially seven jobs will be lost from a 10-strong team, but there are plans to refill some positions.

“By expanding our systematic team, we’re also recognising the increasing role of cost-effective capabilities in client portfolios,” Global CIO of equities David Allen said.

AMP announced it would no longer offer so-called “benchmark-aware” products in Australian equities offering. A benchmark-aware strategy aims to outperform an index.

“We believe demand for benchmark-aware, core Australian equities products is in structural decline over the long term,” Mr Allen said.

“Our research has shown clients increasingly are looking for solutions that can be highly differentiated and cost-effective.”

Mr Allen said the business will remain committed to actively managing funds held by its Australian equities business.

“The decision to change our Australian equities business is part of a deliberate strategy to set up the business for growth by responding to shifting client needs and industry trends,” he said.

AMP Capital runs $29 billion of Australian equities assets for clients. Of that $29 billion, $12 billion is run by the firm’s Australian equities team, with the balance externally run.

Two-thirds of funds under management are already managed systematically and AMP says it expects this proportion to decrease as the team builds its equity income and small caps offerings.

“Because the purpose of what we doing today is supercharging the capability of the highly-active capabilities where we believe we’ve got an edge — equity income, small caps and our ESG capabilities,” Mr Allen said.

“Systematic we would hope will grow, but not at the pace of the more differentiated active funds”.

Current head of Australian fundamental equities, Michael Price, will leave the business “after a period of transition”, AMP said.

“I’d like to thank Michael Price and the outgoing people for their contribution and commitment to AMP Capital over the years,” Mr Allen said.

“They leave with our best wishes for the future.”

The company has appointed Macquarie Group banking and financial services research head Genevieve Murray to lead the new team as equities and systematic co-portfolio manager.

“We are pleased to have attracted a leader of the calibre and experience of Genevieve Murray to AMP Capital and look forward to delivering excellent client outcomes and growth under her leadership,” Mr Allen said.