Barings won over a host of public pension funds last year with strong performance, a concerted marketing campaign and a focused and innovative investment strategy. “They do great independent research and don’t follow the herd,” said Gary Ratliff, cio of the Denver Public Schools Retirement System. Baring sets itself apart from competitors with an all-cap approach, which “lets them really move around the spectrum,” he added.
The firm has about $50 billion under management, of which approximately $32 billion is in equity, overseen by Tim Scholefield.
London-based Barings’ Focused International Fund almost doubled its benchmark’s returns, delivering 20.5% last year against 11.6% from the MSCI EAFE Index. The firm seeks undervalued growth companies; it also adds alpha through country and sector allocation, and currency management. Last year, the international growth manager went light tech, consumer and healthcare, and beefed up holdings in energy and financials.
“The first thing people say is, ‘financials? How did you do that as a growth manager?’” said David Gallagher, head of business development, North America. Barings pulled out of large multinational banks in the spring, sticking with banks such as Standard Chartered, which has about 95% of its interests in emerging markets. Barings also invested in publicly-traded foreign exchanges such as the Singapore Exchange. “Last year was all about what you weren’t in and that led you to areas that were more profitable,” he said.
Barings won about $1.3 billion in U.S. institutional mandates last year in its international core, focused and focused plus strategies; the latter includes emerging markets exposure. The New Mexico Educational Retirement Board invested $325 million in Barings’ Focused International Fund. Barings also started marketing an international growth strategy to U.S. investors in April and won a $100 million mandate from Denver Public Schools. This strategy returned 33.1% last year, compared to 22.7% from the MSCI EAFE Growth Index. Barings is currently preparing to launch a global 130/30 strategy.