, the former chief executive officer, and Peter Rathjens
, the former chief investment officer of PanAgora Asset Management
have announced the formation of their new investment management venture, Arrowstreet Capital
The new firm is majority owned by the two executives and two Harvard economics professors, John Campbell
and Otto Eckstein
. Highcrest Capital Partners LLC
, the private capital affiliate of Putnam, Lovell, de Guardiola & Thornton
, will also take a minority equity ownership.
Arrowstreet's initial products, marketed to institutional investors, will include a range of structured equity and asset allocation investment strategies. Defined benefit pension plans represent Arrowstreet's largest target market because, according to Bruce Clarke, the new firm's chief executive officer, these plans have shown the greatest acceptance of structured investment products.
"We believe that sophisticated institutional investors are increasingly concerned by managers' inability to provide consistent value-added and to control portfolio risk." said Peter Rathjens, Arrowstreet's chief investment officer. "As a result, the U.S. pension community has begun a move away from traditional active management, turning to strategies that incorporate structure and risk control."
Arrowstreet Capital plans to initially focus its strategy and product development on three asset classes: global equities, global asset allocation, and emerging markets. Once these are operational, the new firm intends to develop market neutral versions of these stock selection and global asset allocation strategies.
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