JANA Insights

Steven Carew and Gary Wilson - 2019 Research Trip Overview


June 2020
Steven Carew, Chief Investment Officer
Gary Wilson, Senior Consultant


In late 2019, Steven Carew and Gary Wilson travelled to the US and UK as part of JANA’s ongoing capital markets research program. In addition to macro and markets research, the main objective of this trip was to review active asset allocation strategy within a multi asset portfolio context. Our focus included active asset allocation strategies targeting absolute returns or outperformance of a benchmark comprised of market indices over a short to medium term horizon. For this research, we held detailed review meetings with ten global multi asset managers, covering all of the major aspects of their process. We also met external providers of specialist research engaged by some of the managers


In this article

The key questions we focused on in reviewing these asset allocation processes included:

  • What are the unique elements that differentiate each manager’s process and define an edge?
  • How do all aspects of Philosophy, People and Process work together?
  • How has their asset allocation process evolved over time?
  • Historical performance, and in particular the evidence of active asset allocation alpha.
Read more 7 min read
JANA Insights

JANA Market Commentary – May 2020


June 2020
Lucie Bielczykova, Senior Investment Analyst


JANA’s monthly market commentary summarises global news and economic commentary that is material to markets.


In this article
  • The rebound in risk assets that began in late March extended into May, although the pace has moderated
  • Oil prices recovered significantly, with the WTI crude oil price spiking over 88% during the month
  • The S&P500 ended the month 4.7% higher, while the ASX300 returned 4.6% over the month
  • In contrast, economic data has been weak, with the US unemployment rate reaching 14.7%
  • Both the Fed and the RBA signaled hesitation to negative interest rates
  • The Australian dollar appreciated against major currencies
  • Yields stayed rangebound during the month and credit spreads narrowed
Read more 7 min read

JANA commenced a research collaboration with the University of Melbourne in 2019. A select number of Honours in Finance students undertake research on topics that are developed in conjunction with their supervisor and JANA. JANA provides an industry lens, proposing questions that are relevant to our clients and acting as a sounding board as the students develop their research questions and methodology. In 2019, the first two students completed their Honours in Finance as part of this collaboration.


In this article
  • Angela Pan: Do commodities enhance portfolio performance? An Australian perspective
  • Kelvin Sun: A study of actively managed fund performance in differing volatility states
  • The students were supervised by Professor Federico Nardari, Dr Jonathan Dark and Dr Thijs van der Heijden.
  • Three new students have commenced work on their Honours in Finance under the collaboration with JANA in 2020.

 

Read more 20 min read
JANA Insights

Private Equity – COVID-19 preliminary impact


May 2020
Matthew Moon, Head of Private Equity


The COVID-19 outbreak has had an unprecedented impact on the world with many lives lost and many people facing financial hardship across the world. The virus has not only impacted individuals but also businesses, both public and private, and we believe the worse is yet to come before we see any recoveries.


In this article
  • Provides preliminary observations of the COVID-19 impact on the private equity market.
Read more 5 min read
JANA Insights

Pandemic takes massive toll on bond markets


April 2020
Robert Moore, Head of Fixed Income


Our focus is to help clients navigate the challenges the current environment has posed, but we continue to look to the future to ensure they are best positioned to take advantage of the opportunities that are presented. For those comfortable with some risk and with a long-term horizon, there are significant opportunities.


In this article
  • Robert Moore, Head of Fixed Income outlines the opportunities we see in sectors of the credit market
Read more 8 min read
JANA Insights

Australian Equities 2019 in Review


February 2020
Anthony Ballard, Senior Consultant


2019 provided a strong year of returns for Australian Equities, however many active managers struggled with the market environment which saw returns underpinned by a significant increase in valuations, rather than being driven by underlying fundamentals. For the 2019 calendar year, around 55% of active broadcap strategies outperformed, with the full year period actually showing a significant improvement from only 20% outperformers for the year to 30 June 2019. This article provides a review of the Australian Equities asset class for 2019 and highlights the largely unprecedented level of underperformance experienced compared to strong historical results for active managers.


In this article
  • Performance of the asset class
  • Drivers of market returns and themes
  • Performance of active managers
  • Performance of active managers compared to longer term outcomes
Read more 6 min read
JANA Insights

Key Trends in Infrastructure


February 2020
Claire Simpson, Co-Head of the Infrastructure Research Team


Follow the key trends we see so far for 2020 for the infrastructure sector…


In this article
  • What impact will the Coronavirus have on Airport Assets?;
  • Unlisted Airport valuations see an uplift;
  • UK Regulated water assets – is the worst behind us?;
  • GDP-linked Assets See a Slowdown
  • Australian Regulated Electricity Assets - Are They Getting a Jump Start?
Read more 3 min read

CLOs are structured credit securities which give investors different levels of risk exposure to the bank loan market. This paper looks at the degree of sensitivity of “mezzanine” tranches of CLOs (i.e. those tranches rated BB and below) to the underlying bank loan market. The paper also looks at the current attractive levels of spreads in the CLO market.


In this article
  • BB rated CLOs have shown an average sensitivity of 7 times to the movement of BB bank loans, when measured via rolling one year returns.  This shows the “leveraged” or enhanced sensitivity of CLOs to the performance of the underlying bank loan market. 
  • Whilst higher quality CLOs (e.g. AA or A rated tranches) have reduced sensitivity to the underlying bank loan market (i.e. less than 1:1), mezzanine tranches have amplified sensitivity, due to the structured nature of the securities.
  • Current levels of CLO spreads are relatively attractive compared to other parts of the leveraged credit markets.  Risk premiums have expanded in the sector over 2019, and JANA views the sector as attractive for longer-term investors
Read more 6 min read
JANA Insights

Maintaining Portfolio Balance in Global Equities: Will style diversification finally be rewarded?


February 2020
Matthew Gadsden, Senior Consultant
Daniel Kisnorbo, Consultant


The conundrums of style investing late in the economic cycle.


In this article
  • There are no obvious areas of major dislocation offering attractive opportunities for investment. Overall, Value managers are comfortable with how their portfolios are positioned and the (absolute) returns they are generating. Conversely, Growth managers continue to be strong advocates of the “New World” construct. Both present compelling arguments and deserve due consideration in positioning a global equities portfolio.
Read more 5 min read
JANA Insights

Australian Airports continue to fly high


December 2019
Angela Ruchin, Senior Consultant
Sebastien Small, Senior Investment Analyst


On average, Australian airports make up about ~30% of JANA clients’ infrastructure exposure and most Australian investors with an allocation to infrastructure, have exposure to Australian airports. As such, the outcome of the Productivity Commission (“PC”) review, relating to the Economic Regulation of Australian Airports, has been eagerly anticipated by infrastructure managers, investors and airlines alike.


In this article

The PC has firmly concluded: 

  • the existing light-handed regulatory regime remains fit for purpose 
  • the airline proposal for a ‘negotiate-arbitrate’ regime was a “solution in search of a problem” 
  • the “negotiate-arbitrate” regime being pushed by airlines was deemed to have few benefits and substantial risks. It should not be implemented.” 
Read more 7 min read
JANA Insights

APRA Heatmaps - Are Super Funds Left Sweating Unfairly?


December 2019
Matthew Griffith, Head of Portfolio Construction & Risk
Neil Maines, Consultant



In this article

Last week saw the release of the inaugural APRA heatmap, one of a suite of tools to be used by the regulator to try and drive up the quality of outcomes delivered to superannuation members.

The press coverage in the immediate aftermath of the release included as much discussion on the construction of the heatmaps themselves as there was on actual results achieved. JANA have provided our own observations on the heatmaps as well as suggested several improvements for future releases we think will address some of the criticisms raised by the industry.

Read more 25 min read
JANA Insights

PRI in Person Conference Summary


October 2019
Tim Conly, Senior Consultant


PRI in Person is the largest responsible investment conference in the world, with c. 1800 delegates attending this year’s conference in Paris. This article provides a brief overview of the key topics discussed


In this article
  • This conference reinforced the message that Australian asset owners are grappling with the same challenges that global investors are, and that Responsible Investing is an evolution not a destination.  
Read more 5 min read

There is an increasing need for distribution networks, particularly the “last mile” logistics close to cities with high population bases.


In this article
  • In excess of 8.5 billion kilos of food is distributed throughout New York City (NYC) each year.  
  • NYC’s food distribution system serves 8.4 million residents, over 60 million annual tourists and hundreds of thousands of commuters on a daily basis.
  • NYC (like many global cities) has a high dependency on last mile distribution logistics which feeds into the retail supply chain.
Read more 5 min read
JANA Insights

How does the Domestic Private Debt Space compare Globally?


October 2019
Robert Moore, Head of Fixed Income
Young Jo Bae, Consultant



In this article
  • The Australian Private Debt market appears equally attractive to global private debt markets, on a risk-adjusted basis.
  • The paper takes a unique approach in directly comparing the characteristics of domestic private debt offerings to global private debt offerings.  
  • Previous papers on the Australian private debt space that JANA has reviewed have made comparisons to the liquid, leveraged loans market in the US, an approach we feel is inappropriate given the vast differences in liquidity between the markets.
Read more 2 min read

The Australian equity reporting season was one of the weakest in over a decade with only a quarter of all companies reporting beating consensus earnings expectations.


In this article
    • Disappointing Australian equity reporting season with more downgrades than upgrades.
    • Corporate revenue declining, costs rising, earnings margins compressing, dividend expectations falling.
    • JANA maintains its view on the outlook for the Australian equity market as well as an underweight recommendation for Australian equity portfolio positioning.
Read more 3 min read
JANA Insights

Looking beyond the 70/30: Alternatives Research trip highlights


August 2019
Courtney Wilder, Senior Consultant
Iain North, Consultant


JANA’s Courtney Wilder and Iain North recently returned from a global research trip where they focused on a specific sub-set of alternative investment strategies that are in demand across our client base.


In this article
  • As clients seek solutions away from the status quo, research focuses on growth Alternatives as well as bond replacers
  • Multi-Strategy Quant, EM macro, Insurance-linked, Fixed Income Relative Value, and Merger Arbitrage specialists
  • Demand for alternatives continues to rise and is a priority for JANA research 
Read more 13 min read