Bedlam Asset Management has begun to gain traction in the U.S. institutional market with its global equity fund and sees its opportunity set only growing moving forward. The London-based firm, founded over six-and-a-half years ago, has seen a movement in investor sentiment toward global equity funds as pension funds and other institutional investors shift from an equity portfolio with geographical biases toward a global strategy. Ian McCallum, director and cio of the firm, said that while there was a little bit of luck involved in the firm launching into a space that has grown in interest, "it was something that we envisioned purely because we could see it from our analysis." The firm, which has approximately $350 million in assets under management, was hired toward the end of 2008 to manage a global equity portfolio for the Arkansas Teachers Retirement System and also manages funds for the Maryland State Retirement System and California Public Employees Retirement System through manager-of-managers FIS Group, according to Emerging Manager Monthly research. "We are getting good traction in the States," said McCallum, who utilizes third-party marketing firm Arrow Partners. "It’s a key market for us." McCallum said the firm has put an emphasis on corporate structure since its launch, focusing on transparency, capacity constraints and a strong balance sheet.
"Those three issues are massively important and if companies don’t have them in place, you shouldn’t invest in them," he said, adding that especially following the Bernard Madoff and Stanford Financial scandals, transparency has become even more important
To that effect, the firm provides full transparency of its holdings on its Web site, which McCallum said also ensures extreme discipline on the investment side. "The reality is you are going to get things wrong. You’ve got to understand why it went wrong and you’ve got to learn from that," he said. He said the firm’s investment process is centered around minimizing and reducing risk. "Ultimately the returns will almost take care of themselves," McCallum said, explaining there are two risks in investing, buy- ing at the peak in an earning cycle already priced out and invest- ing in companies with big earnings headwinds. "That is two risks that we are trying to strip out." To accomplish this, the firm uses value and sector screens that look to identify cheap stocks and also ensure a stock isn’t appear- ing attractive due to headwinds at the industry level. Those screens kept the firm from suffering with the banking sector over the past year. "We are really one of the only, if not only, long-only global equity funds that has never held a bank in the English-speaking world," he said, explaining that over the firm’s life, it has held a bank in Germany and two banks in Japan, though those positions were sold before the end of 2007. "We still don’t hold any banks because we strongly believe the global banking sector as a whole is largely insolvent," he said. The portfolio typically holds 35-50 stocks, with regional weightings based on respective GDPs times a factor of 1.5. The firm’s initial individual position is usually 1.5-3%.
It probably wouldn’t surprise many Americans if the London-based Bedlam Asset Management’s name came from the word’s literal definition, especially when thinking back to all those videos of soccer hooligans taking over the streets. However, the gene- sis of the name comes from a much different place, in fact, it comes from a few places. Bedlam is an acronym for Belfast, Edinburgh, Dublin, London Asset Management. Ian McCallum, director & CIO, said the name was thought of by one of the firm’s shareholders. Also, the firm’s office is near the original site of the Bedlam Mental Hospital, which is where the word "bedlam" actually got its origins. The psychiatric hospital is now known as Bethlehem Royal Hospital.