Morgan Stanley Investment Management
Equity manager of the year
Insurance Asset Risk Awards 2019 - UK & Europe

In the current low-yield and complex regulatory environment, the search for alpha is increasingly important for insurers. In order to incorporate these new criteria, especially in mandates where the solvency capital requirement is a constraint, Morgan Stanley Investment Management (IM) established an interdisciplinary effort between its portfolio management teams and dedicated insurance specialists.

In particular it has developed a global opportunity strategy managing highly differentiated, concentrated portfolios that invest across geographies, sectors and market capitalisations. The strategy seeks long-term capital appreciation by investing in high-quality companies that the investment team believes are undervalued at the time of purchase.

The investment process integrates analysis of sustainability with respect to disruptive change, financial strength, environmental, social and governance externalities; and fundamental analysis of competitive advantages that can be monetised through growth.

Morgan Stanley's portfolios are concentrated in its highest conviction ideas. The firm seeks to hold 30 to 45 positions with its top 10 holdings generally accounting for 50% of the portfolios. The result is a suite of portfolios that look very different from the benchmark, with active share generally 90% or higher, and tracking error ranging from 5 to 10%.

Richard Sarsfield European head of insurance solutions at Morgan Stanley IM said: "the Global Opportunity equity fund which, in the 12 month period ending 30 September 2018, produced outperformance of 9.12% against the benchmark, net of fees. The Team headed by Portfolio Manager Kristian Heugh, has been managing money since 2006. As of 30 September 2018, the team managed £14.6bn in the strategy, of which approximately £1.2bn is managed on behalf of our global insurance clients."