Weekly Fund Distribution Notes – 11 March 2025
26th March 2025
Plenty of interesting news this week; mainly in terms of new mandates, replacements and other fund selector stories. Also, the accelerating US / Europe divide continues to take its toll on manager selection, but also on asset allocations and fund category flows.
Let’s kick off with mandate news. Up in the very north, NBIM, Norway’s EUR 1.7 trillion sovereign wealth fund, which by the way currently invests with some whopping 110 (!) external managers in long-only strategies, has made its first investment with an external hedge fund – announcing it was allocating billions to long-short equity hedge funds in the near future. In the UK, St James’s Place has added 6 boutique asset managers to its EUR 2.3 billion Global Smaller Companies fund as the product switches to a multi-manager approach. The fund will be advised by EdgePoint, Select, MAC Alpha, Kabouter, LSV and Kopernik, each with distinct geographic focuses and strategy characteristics.
Moving on to France, the pension fund Fonds de Réserve pour les Retraites (FRR) has appointed Fidelity, Nomura, as well as Lombard Odier to run active Japanese equity mandates worth an average of EUR 400 million each. With FRR being a Net Zero Asset Owner Alliance member, external managers will be required to achieve an emissions reduction target as well as to provide detailed and regular extra-financial reporting on all ESG dimensions.
We already addressed the accelerating paradigm shift – the increasing ESG but also the geopolitical gap between the US and Europe, last week, reporting that State Street (SSGA) has been fired by People’s Pension in the UK as the manager of a EUR 33 billion fund, quoting Dan Mikulskis, CIO of People’s Partnership, as saying that “the increasing difference in the positioning of US versus European asset managers was a huge story and made it easier to decide which players were most aligned with the scheme’s objectives.”
Just a few days later, the Spanish bank and AM giant CaixaBank announced it was to drop BlackRock as the advisor of its EUR 1.2 billion impact fund range, with the mandate due to go to Schroders in April. The next day, the news emerged that SSGA had lost another mandate, this time from AkademikerPension, stating that “external fund managers are bound by our responsible investment policy and are continuously assessed by our responsible investment team … the odds of US managers being picked have become lower.”
Well, it is hard to tell if there is a real trend in the making. Fund / manager selection should always be about picking the very best ones. However, the current geopolitical events and shockwaves are unprecedented, at least in my lifetime. Born and raised in Stuttgart, in the Neckar valley in southern “West Germany”, I grew up in the most Americanised way you can imagine. Anti-American waves were always there, they did come and go, but this time it is very different. Anyway, when it comes to sustainability related matters, most (not all) US managers have an undeniable disadvantage in European fund distribution now.
In terms of other fund selector news, Citywire Selector ran features on Davide Saccone, head of manager selection and ESG at Quaestio Capital, Massimmo Ricatti, FoF PM at BCC Risparmio & Previdenza, and – right on time for international women’s day on Saturday – a piece on Europe’s most influential female fund selectors, featuring 32 selectors, mostly with team size, AuM and other insights. Check it out and take note!
What else? Coming back to the US / Europe divide, we already mentioned a changing European allocator sentiment and the recent European outperformance, in the last newsletters. Now, European ETF sales in February put US ETFs at the bottom of the worst-selling category table, after having been ranked 1st in best-selling categories in Q4 2024.
Speaking of ETFs, after the first semi-transparent ETFs have been filed with the Luxembourg regulator, ETF Stream reports that the Central Bank of Ireland will already consider applications for semi-transparent active ETFs. Well, whilst this makes it certainly easier for active managers to consider active ETFs, it needs to be seen how active these ETFs will be in reality. So far, active ETF assets in Europe sit almost exclusively in the “very shy active” / “benchmark with a little variation” bucket.
In this context, Citywire quoted Vanguard’s head of fixed income product for Europe, Kelly Gemmell, this morning as saying that “we acknowledge the growing interest in active ETFs but client demand in Europe hasn’t reached a critical mass … much of the active ETF buzz is amplified by asset managers, who get attracted to the noise and want to be part of it.”
Last but not least, I am ready for summer now! Seriously.
