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Rating:Needles Looks through Haystacks, for Sub-Advisors Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, April 02, 2014

Needles Looks through Haystacks, for Sub-Advisors

Reported by Tommy Fernandez

Hedge fundsters, alts folk, prepare your dance cards. American Beacon is looking for a few sub-advisors to fuel its latest surge into the alts space.

In fact, president and chief executive Gene Needles was in New York this week to meet with some potential candidates. He visited MFWire Tuesday to elaborate a little on these efforts.

In short, American Beacon is conducting a comprehensive search for what Needles described as "under-appreciated, under-invested investment excellence."

Needles and his colleagues plan to launch at least one alt fund, maybe more, this year. He says he regularly meets over 50 managers before selecting one sub-advisor.

"We are particularly interested in managers that have high conviction, or are concentrated, or have flexible mandates or work in inefficient asset classes -- if a manager has all of these qualities, we'll take it," he said.

American Beacon had brought in Needles, who was previously chief executive and president at Invesco Aim Distributors, five years ago to build up the firm's retail operations.

The firm now has has 12 external wholesalers and one hybrid, as well as six internals on the retail side. There are three salespeople on the institutional side as well as one key account person and various sales management.

An example of the kind of sub-advisor Needles is looking is Global Evolution, a unit of the Denmark-based Global Evolution A/S which sub-advises the roughly five-weeks old American Beacon Global Evolution Frontier Markets Income Fund.

The seven-year-old sovereign debt shop specializes in hard-to-research emerging and frontier market economies, according to Needles. Countries like Ghana or Costa Rica which would require managers with local expertise on what to look for and who to meet, and how to meet these people, when gauging these economies.

"It is hard work investing in these countries. You have to know your way around," Needles said.

One of the advantages of such a fund is that such emerging markets are not-correlated with each other, nor with much of the global economy. Also, these governments can offer solid returns as they build up their economies.

What does American Beacon offer such entrants to '40 Act Country? Needles says its distribution expertise and plenty of attention.

"You make a strong value proposition by delivering on your promise to sub-advisors, giving them the support and effort you promised them. The resulting success of these products creates a virtuous cycle for us," he said. "I want to be the George Clooney of the asset management industry. I want to see these managers first, not after everybody else has passed on them."

These efforts have paid off over the past few years for American Beacon. Sales grew 90 percent last year, after growing 54 percent in 2012. Needles says the firm is on track now to grow at about 40 percent this year. As of December 31, 2013, American Beacon Advisors had $53.3 billion in assets under management.  

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