UK – Hermes, the asset manager owned by the BT Pension Scheme, has restructured its real estate team in a bid to increase its market savvy.
Under the new structure, dedicated fund managers will narrow their focus to concentrate on specific sub-sectors. The result will be to increase market awareness by better combining strategic thinking from fund managers and bottom-up asset-specific skills from recently appointed tactical asset managers, claimed the firm.
“Historically – and this is the case in most institutions – fund managers have covered a number of different sectors, which means that they never know enough about one sub-sector to be able to call themselves an expert,” said Rupert Clarke, head of real estate at Hermes.
“We have a big enough portfolio to be able to give our fund managers responsibility for specific sub-sectors. They’ll still be handling around £1bn in assets but it means that they’ll have a better idea of major players in a sub-sector and that they’ll really know what’s going on.”
With the structural shake-up has gone a name change from ‘Hermes Property Asset Management’ to ‘Hermes Real Estate Investment Management’. The idea is to switch the emphasis from bricks and mortar towards real estate as a financial investment, said Clarke.
“Real estate is certainly a more acceptable investment medium than it was 10 years ago – partly because it’s fashionable and partly because equities are turning out to be less attractive than people thought they were,” said Clarke.
“We certainly wouldn’t claim that property’s prospects will be wonderful forever more, and there will come a time when it will not perform as well as equities,” he added. “But real estate clearly having a good run as the top performer out of all asset classes over three, five and 10 years.”