Darren Bustin, head of Solution Capabilities at Schroders Solutions discusses his newly created role and how it is steering clients though these volatile markets.
Darren Bustin is head of Solution Capabilities at Schroders Solutions. Previously he was with Royal London Asset Management (RLAM), where he served for over a decade, most recently as head of derivatives. Before RLAM, Bustin spent two years as head of derivatives solutions for Aegon Asset Management and as an associate director at Aladdin Capital Management. Prior to that, he spent two years as a volatility and structured credit trader at BNP Paribas and a year as a junior trader and convertible bonds’ trader’s assistant at JP Morgan.
Can you tell me about Schroders Solutions and why it was launched?
Schroders Solutions was created in February 2022, through the merging of the Schroders Portfolio Solutions team with the acquired River and Mercantile Solutions Division. It is responsible for the management of £225.7 billion of assets as of 30 June 2022.
Its purpose was to enhance our abilities to meet the increasingly complex needs of both our existing and future clients. The business aims to be the provider of choice for clients with complex investment and governance needs by offering multiple capabilities across a wide range of asset classes.
What is the new role and what does it entail?
I joined in September 2022 as head of Solution Capabilities. My main focus is to work closely with our fixed income and equity solutions businesses to support the growth of the business and to widen our solution capabilities to meet the ever-changing and differing needs of our expanding client base.
Another facet of my role is to focus on the global insurance market, working with our specialist Insurance Asset Management team and wider investment teams including our private assets business Schroders Capital, to deliver investment solutions for the complex world of insurance.
I also sit on the Executive Committee of Schroders Solutions. As a part of this, I chair Schroders Solutions’ Investment Committee and provide oversight and governance around our solutions capabilities in order to ensure we continue to offer a market-leading proposition in a robust and well governed manner.
Furthermore, I chair Schroders Solutions’ People Committee. Our people are critical to the success of the business, as is having the right culture to enable our teams to be high performing. I am a strong advocate of putting our people at the forefront of what we do.
There is a lot to keep me busy and I am relishing the challenge!
What impact have current market conditions had on fund managers in terms of investment and governance?
Dependent on the market, current conditions have been generally more volatile than what could be considered ‘normal’ and market moves have been highly correlated.
In terms of investment and being a solutions provider, these conditions create opportunities for us and our clients. Even though markets have been challenging, our solutions have performed in line with our clients’ expectations.
Furthermore, in these periods of volatility, governance is critical, and as Chair of Schroders Solutions’ Investment Committee, our governance processes are deliberately robust and designed to cope with these market conditions.
What are some of the challenges?
In any time of volatility, or market challenge, our focus immediately turns to our clients, their needs and the solutions we have or can provide them. We strongly believe in partnering with our clients to help them navigate these times and a lot of our focus is centred on the customer experience we provide. Communication and information is key so that clients feel informed and can make decisions.
Where our clients need help or wish to outsource their investment decision-making then our fiduciary management (FM) solutions are aimed at supporting them on this journey.
What types of strategies are being deployed to mitigate risk but also leverage market opportunities?
We offer a wide range of strategies, from simple to complex, to meet the wide range of our clients’ needs. We are product and strategy agnostic, and we adopt what we call a ‘solutions mindset’ which is focussed on delivering outcomes for our clients.
That said, we see a number of strategies being deployed across liquidity, risk-managed investments, equity downside protection and also on the outsourcing side of things in fiduciary management and outsourced CIO-type strategies.
A small number of our pension clients have now reached a point whereby they can achieve buy-out, demonstrating that Schroders Solutions has delivered on its solution approach and our clients are able to realise their investment objectives.
How does ESG or sustainability fit in?
Sustainability is core to all we do at Schroders Solutions and runs central to our solutions thinking when both designing and managing our clients’ solutions. Given our ability to tailor investments, we are able to design solutions with specific ESG outcomes embedded within them. We have seen great demand for this, particularly within our fixed income offering, especially our ‘Buy and Maintain’ credit solutions, to include ESG, sustainability and climate change focused outcomes for our clients.
As many fund managers have not seen this type of volatility before, what type of skillsets do they need in this environment?
Market volatility has indeed increased, and, for some markets, this has been comparable to well-known historical events. Our team is very experienced and this, coupled with our well-designed solutions, means we have delivered on our outcomes for clients in this challenging market environment.
Our solutions teams include a wealth and diversity of experience that enables them to utilise the experience but also to devise innovative solutions to meet the challenges created by increased volatility.
As Chair of our People Committee I am also an advocate of learning and continuous improvement. We are always looking at what we have learnt and how we can adopt that into our solutions thinking and processes to ensure even more robust or enhanced outcomes for our clients. This extends to our people too, where I am a strong believer that we should never stop learning.
How has your experience helped you navigate the current conditions?
I have nearly 20 years of experience of financial markets which have included the financial crisis of 2008/9, Brexit and many other periods of volatility and market challenge. What my experience tells me is that no two events are the same. However, I do strongly believe that my experience has allowed me to develop a robust ‘personal framework’ that helps me respond rather than just to copy a ‘playbook’. This framework is continually updated as my experience grows.
In a solutions context, what my experience has taught me is that we have to consider the unexpected within our investment solutions and test them for a wide range of scenarios. I believe this type of thinking has stood us in good stead.
Are there any new solutions that you think are gaining traction?
With an ever changing world, which encompasses geopolitical, macroeconomic and regulatory challenges, we strongly believe that a ‘solutions mindset’ approach – which is asset class and strategy agnostic – is the best way to approach investment challenges and design solutions.
We are continuing to see very strong appetite for our leading Fiduciary Management and Liability Driven Investment (LDI) solutions in the UK Defined Benefit market, as well as outsourcing solutions for the global insurance market, and demand for risk management strategies in equity markets. As financial markets continue to evolve, we are well placed to be able to offer our clients, both existing and future, a wide range of solutions to meet their needs.
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