Asset manager: Crown Agents Investment Management

Crown Agents Investment Management implemented a specialised SDR-based investment solution at three central banks after the International Monetary Fund increased special drawing rights (SDR) allocations in 2021. The solution benefited central banks that did not need to use the funds for immediate economic support. CAIM also helped these and other developing-economy institutions through tailored learning programmes and training, offering a personalised touch that clients continue to appreciate to this day.

The 2021 SDR allocation was a “historic allocation” of about SDR456 billion ($650 billion), says Jude Kuwan, CAIM’s head of business development and relationship management. An existing CAIM client reached out for advice on how to efficiently use treat these unutilised assets after 2021. “They asked us how to handle these SDRs since their economy had largely weathered the pandemic and the assets were just sitting on their balance sheet,” Kuwan says. SDRs thus became the second mandate managed by the firm. 

CAIM was able to draw on institutional knowledge thanks to its chief executive, Roberts Grava, having served on the board of the Bank of Latvia in the past. Prior to joining the euro, Latvia’s lats had been pegged to the SDR, hence Grava’s experience with the asset.

SDRs were created in 1969 to offset some of the pressure on the US dollar. The value of an SDR is determined by its constituent currencies, which are reviewed every five years: as of August 2023, 43.38% of each SDR is determined by the dollar, 29.31% by the euro, 12.28% by the renminbi, 7.59% by the yen and 7.44% by the British pound. SDRs earn interest at a weighted average of constituent currency interest rates, and this rate is recalculated weekly: at the time of writing, it stood at 2.7%, having risen from 0.05% pre-pandemic to a peak of 4.2% in May 2023.

SDRs have three-month liabilities and converting them to constituent currencies is as easy as picking up the phone and asking the IMF to do it while choosing the one or more denominations to receive the funds in. The first CAIM client gave the firm its entire SDR allocation to deploy. After converting it into the component currencies, CAIM invested them into an actively managed “central bank-like portfolio” according to the institution’s investment guidelines.

Helder da Silva, the deputy director of financial markets at the Central Bank of Eswatini, tells Central Banking that the bank had first piloted converting SDRs into hard currency and then managing it internally on the short-term money market, but ended up outsourcing it to CAIM for better returns from October 2023, at which point the bank also doubled its mandate with CAIM.

“Definitely, the performance is positive, if we look both in terms of what they are adding, in terms of outperforming the benchmark and also outperforming the SDR interest rate,” da Silva says. He adds that thanks to the positive experiences the central bank had with CAIM before the SDR project, it was possible to take the idea to the firm and immediately start developing a solution that would yield more than the bank’s internal approach.

Ali Homelo, chief manager of financial markets and exchange control at the Central Bank of the Solomon Islands, tells Central Banking he has worked with the firm since 2023. The SDR portfolio has “grown gradually and has delivered positive results to date”, he says, noting the bank initially had encountered an issue accessing yield from the portfolio to pay the SDR interest charges, but this was swiftly overcome following a discussion with CAIM. Now, 95% of the bank’s SDR allocation is in the hands of CAIM. 

Michael Buckle, a senior director of the Bank of Jamaica’s foreign reserves department, agrees. He says CAIM acted as the “closer” in “basketball terms”, when he was convincing the bank’s board to approve his idea of investing in SDRs. CAIM’s performance had consistently outperformed the benchmark, even before investing in the SDR allocation, he says. The long-standing relationship between the Bank of Jamaica and CAIM gave the executive board enough confidence to approve the idea.

Part of the appeal was CAIM’s expertise with investing in the different SDR constituent currencies, Buckle explains. For example, the BoJ lacked an understanding of the renminbi, but CAIM could fill in the gaps. The bank first allocated $250 million of SDRs to CAIM, a portfolio that has since been doubled. At first, the bank considered mandating CAIM to invest based on each currency’s share in the SDR basket but, in the end, the BoJ did not want to “straitjacket” the investment manager. Instead, it entrusted CAIM with investing the funds as it saw fit, and now gets to report the portfolio’s outperformance compared to the standard SDR interest rate.

Bespoke training

One of CAIM’s advantages as a boutique firm is that it is more able to provide tailored training programmes to its clients that are often outside of the scope of some of its larger rivals.

The Central Bank of Eswatini’s da Silva says this was an important benefit of working with CAIM. He recalls the initial stages of the relationship when, for the first three years, CAIM held regular, interactive calls on which it was “very intentional about passing on the skills of active management”.

Managing an SDR-based portfolio provides various dimensions of training for client central banks, from understanding multi-currency portfolio management to navigating global fixed income markets across five different currencies, Kuwan explains, adding that CAIM provides “practitioner-focused training across the board”.

Homelo says CAIM has been “highly receptive” to training requests, and that the firm has been ready to deliver online training in both one-on-one and group sessions focused on investment reporting, portfolio performance and “specific investment-related undertakings”.

Da Silva adds that CAIM officials pay regular visits to the bank, at least twice a year, as well as running an annual workshop for all clients in October. Moving forward, Da Silva would like to organise workshops for central bank staff to build up internal reserves management capacity. 

The Bank of Jamaica’s Buckle says that he can’t think of ways to improve the relationship between the bank and CAIM, because if “it is not broken, you don’t fix it”. He says doubling the portfolio is “as strong a statement of confidence as possible” the bank can make. He says CAIM has been an “outstanding partner” in growing reserves, which had been “miniscule” when the firm was first appointed.

“With our smaller pool of reserves, CAIM helps us think outside the box and do a few things that may be deemed unconventional and derive value out of our assets without taking unnecessary amounts of risk,” da Silva adds.

“CAIM provides comprehensive support from the outset and remains engaged throughout the investment process. While their services may involve higher costs compared to some alternatives, the quality of support and guidance makes this a worthwhile and strategic investment,” Homelo says.

“Crown Agents have distanced themselves far and above the other two asset managers we work with,” Buckle says.

The Central Banking Awards 2026 were written by Christopher Jeffery, Daniel Hinge, Daniel Blackburn, Joasia Popowicz, Levente Koroes, Thomas Chow, Jono Thomson, Riley Steward and Blake Evans-Pritchard.