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The current investing environment seems more unpredictable than at any time in recent memory. Yet, uncertainty about where to invest represents a major opportunity for multi-asset managers with global reach and the ability to opportunistically select markets and underlying strategies.

For well over a decade, the PineBridge Multi-Asset team has demonstrated an ability to maneuver through ever-changing market conditions. We seek to outperform irrespective of economic, political, and market backdrops. Our process seeks to invest by embracing the right markets, at the right time, with attractive underlying strategies and managers.

How do we do it? With an innovative investment culture built around diverse points of view, collaboration with colleagues, and partnerships with clients. This keeps us connected to the challenges facing investors across and within markets.

One of the most unique aspects of PineBridge’s Multi-Asset team is its diversity. Spread across five locations around the world and featuring a wide range of languages, ethnicities, and fundamental expertise as well as scientific backgrounds, the team is able to leverage a network of approximately 200 on-the-ground specialists to get an edge over our far bigger, yet less cohesive, competitors. As Global Head of Multi-Asset Michael Kelly puts it, “this means we function both as a team of 21 and a team of ~200.1

Generally, we’re competing with other multi-asset firms that are huge, yet siloed. We believe our midsize footprint and collaborative culture drive better outcomes for our clients. This enables us to identify opportunities that most purely top-down managers would never see, yet to compare the best-of-the-best ideas across asset classes with potentially greater objectivity than specialists, who often grow too attached to their asset classes.

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Bringing it all together

Our network enables us to synthesize top-down views with bottom-up perspectives through active debate, which can thrive only when people know each other well and bring many different perspectives to the table. While our network and portfolios are global, with experienced specialists in EMEA, Latin America, and the US, we have a particularly strong base across Asia – where the world’s most significant changes are occurring.

“Where PineBridge has demonstrated expertise, we’re bringing it to our clients for no additional cost, and that’s something invaluable from their perspective – having that partnership and connectivity to our entire firm,” says Portfolio Manager Deanne Nezas. Indeed, our clients often visit on-site to gain deeper insights from professionals across the firm, helping them navigate areas where they’re seeking additional perspectives.

“We have many feet on the street throughout Asia,” Kelly says. “Our numerous China watchers helped us build conviction to make a significant investment in mainland China during a challenging time for markets at the end of 2018.”

Having differences of opinion represented at the table is crucial to being able to foresee change, and this philosophy is an integral part of how we work at PineBridge. We have a unique culture - don’t have a house view; instead, we encourage people to express their own views on how they see the world evolving through an institutionalized set of meetings.

Kelly explains: “If you’re in a communicative, collaborative firm like ours that can discuss differences of opinion, and can disagree without becoming disagreeable, you have a potential edge on the market.”

Big market moves are born out of uncertainty. House views impose certainty, thereby destroying most of the information diverse firms have by virtue of their global footprints. “Given the breadth of skill sets and geographic perspectives inside PineBridge, the right answer is almost always in the room or on the phone. We just need to get it out in the conversation, have a process that compares all the potentials to ferret out the truth, and know it when we hear it,” says Kelly.

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A solid basis of research and fundamental and macroeconomic analysis is in the hands of Chief Economist Markus Schomer, who takes advantage of PineBridge’s large network of local experts. Schomer focuses on the topdown analysis at PineBridge and develops macroeconomic scenarios across the firm.

Schomer and the team focus on the intermediate-term horizon, an outlook from nine to 18 months, as well as a longer view looking out up to three years. “This enables us to form more meaningful macro scenarios,” says Schomer. He partners with multi-asset senior investment leadership to bridge the macro to the micro, and help the team determine the best way to optimize the two within a disciplined risk budget.

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Strategy meetings and forums inform the construction of our Capital Market Line, a five-year view of risk and return across the investment spectrum. These quarterly sessions represent an opportunity to tune out market noise and think clearly together. These are then supplemented with seven monthly strategy meetings that focus more on current developments. 

The forums focus on what’s moving markets, and all of our investment professionals can participate and hear the latest from our subject-matter experts on what’s relevant for each market, whether it’s currencies or rates, or at an asset class level. Our unique culture enables constant dialogue, not only through these meetings but through everyday interactions. This organized familiarity is a cornerstone of our firm’s culture and sets us apart in the industry.

The regular meetings that inform the Capital Market Line enable the Multi-Asset team to assess the most compelling opinions from across asset classes and distill them to form our forward-looking view of risk and return.

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Multi-Asset Investment Process:

Our Dynamic Approach Adjusts Based on the Unique Opportunities of Each Market Cycle

For illustrative purposes only. We are not soliciting or recommending any action based on this material. Any views represent the opinion of the investment manager and are subject to change.

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At other asset managers, the equity team will decide what the equity market return will be, the fixed income team decides their own return, and the multi-asset just combines them together. But the overall portfolio can end up with inconsistent, incoherent views. According to Portfolio Manager Hani Redha, “at PineBridge, our team assesses the most convincing arguments and combines them to form the Capital Market Line, which informs our portfolio construction.”

These investment forums also enable the team to respond dynamically to market volatility by ensuring that everyone is regularly exposed to different perspectives on the data, helping to glean fundamental signals and inflection points from the noise. This can be highly valuable, both in terms of spotting new opportunities and conducting risk management.

“We only have an edge if we communicate very effectively with our bottom-up specialists,” Redha says. “So when volatility spikes, we can de-risk because of the trajectory we – generalists and specialists working together – see unfolding for those fundamentals.”

This ability to be nimble, and adjust as market conditions dictate, is critical to helping our clients meet their specific objectives.

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“When we asked our specialists what exactly these companies were investing in, it was very clear that it was in different forms of technology to make these businesses more efficient and more productive.” adds Ng.

To benefit from this trend, our Multi-Asset and Equity teams collaborated to identify stocks with the highest potential revenue exposure to these themes – for example, stocks in cloud computing and cybersecurity – ultimately creating a thematic basket in which to express this theme.

The team’s productivity basket was recognized by Chief Investment Officer magazine, which named PineBridge’s Multi-Asset team as the most innovative multi-asset manager of 2018.2 

At the same time, not every thematic idea will make it into the portfolio. As Michael Kelly puts it, “You need to be selective and surgical. And the only way you can do that is by looking through the noise and identifying the fundamental driver and how it will affect those select emerging markets or portions of developed markets over time.”

We can be highly flexible, and go deep quickly, through collaboration between the Multi-Asset and specialist teams at PineBridge.

One example is collateralized loan obligations (CLOs). “The firm has great depth of capability in CLOs,” Kelly says. “Our fixed income teamis a prominent issuer of CLOs, and having that expertise at the firm allows us to identify the most potentially valuable portions of the capital structures of other CLOs in the market.”

This same flexibility exists when it comes to applying ESG screening, something the team has been committed to for a decade. PineBridge is a signatory to the UN Principles for Responsible Investing.

“ESG is something that’s important to us as a firm,” says Portfolio Manager Paul Mazzacano. “We understand that environmental, social, and governance issues present risks as well as opportunities. As a team, we incorporate these decisions within our investment process, using them as an additive input, rather than relying on an exclusionary approach.”

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Flexibility is key

“We go out of our way to be transparent and understandable to clients,” Kelly says. “We think the industry has a lot of heterogeneity in the way multi-asset strategies are delivered, which clients and consultant constituents sometimes struggle to understand. When we speak to clients, they recognize that our alpha source comes primarily from opportunistically selecting about 10 to 15 high-conviction markets in a portfolio construct, and then secondarily, how we express this with a mix of underlying strategies.”

He adds, “Most multi-asset managers will only utilize a set menu of internal strategies. But we are committed to results for our client portfolios, and allocate flexibly across passive, enhanced, and internal or external active strategies, whichever our manager research reveals should add the most value.”

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1 As of 30 June 2021. Investment professionals include portfolio managers, research analysts, traders, portfolio strategists and product specialists, and are subject to change. Includes investment professionals at the senior vice president and managing director level.

2 The CIO Industry Innovation Awards are split into two general categories: asset management/servicing and asset owners. The CIO editorial team makes the final decisions as to finalists and eventual winners with input from their awards Advisory Board, as well as surveys and data where applicable. Third-party rankings and recognition from rating services or publications are no guarantee of future investment success. Working with a highly rated advisor does not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluation.