Weekly Fund Distribution Notes – 18 February 2025
5th March 2025
Selector promotions and selectors talking portfolio analyst assessments as well as asset managers pulling out of climate-focused initiatives. Some distribution partnership and mandates news. Also, there seems to be some real FOMO back in the asset management town. Here is where the fund distribution industry may consider some lessons from some contrarian investor legends.
Citywire Selector published a worthwhile read on how selectors assess analyst roles. Rasmus Bartholdy, senior portfolio manager and selector at AP Pension, was quoted as saying: “I give this a lot of consideration. In fact, mapping out the organisational structure of any given investment team is one of the first things I do during due diligence. The structure tells a lot about the strategy.” Stijn Lock, investment consultant at Insti7 in France and a member of the “40 under 40 class of 2023” also checks out analyst assessments when he first considers funds, resulting in one of the key questions: “Is there consistency between how the analyst and the portfolio manager assess stocks?”
Consistency is also vital to Christophe Jaubert, CIO at Mediolanum AM. “What we are looking for is consistency between what we are told and what the process involves. To ensure this, we conduct case studies with the prospective manager, asking them to describe the research done on an investment in their portfolio. We repeat this process on different investments with different analysts on the team to verify that they are conducting their research in a consistent and rigorous manner. This approach provides a solid evidential basis for our recommendations.”
On a side note, something which makes me extremely proud in this context is that everybody who has visited us in the last 12 months or so was very impressed indeed by our young gun analysts.
In another Citywire article, Barbara Katzdobler, senior member of the AM and treasury team at Austrian group Wiener Stadtwerke and Joonas Timonen, analyst and fund selector at Aktia, discussed the impact of asset managers pulling out of climate-focused initiatives. Tominen added an important point on regional differences, not only in terms of Europe versus the US, but also within Europe. For instance, “every region has its own topical issues and agenda. Within ESG and the Nordic and Finnish context, one recent topical issue has been the role of defensive weapons.”
JP Morgan Private Bank’s head of fixed income and multi-asset research, and 2022 Citywire “40 Under 40” selector, Alejandro Gonzalez, got promoted to executive director at the firm. Speaking of former “40 Under 40” names, former fund selector at UK-based asset manager Sarasin & Partners Adil Alaoui has joined Abu Dhabi Islamic Bank (ADIB) as a product manager based in Abu Dhabi.
In terms of distribution partnerships and mandates, the Spanish giant CaixaBank and Amundi have launched a new range of “lifecycle” ETFs, with target dates ranging from five to 14 years. Also, Nomura AM has been selected by French state-run investment bank Caisse des Dépôts to manage a global sustainable equity fund.
What else? After all these years in our industry, I still remain rather puzzled about the extent to which asset managers move in herds – in particular when it comes to the hottest must-haves / must-offers. Financial News even headlined that “Europe on the verge of active ETF tsunami”, quoting Hector McNeil, co-CEO of HANetf, as saying that “every European asset manager is looking’ at rolling out active ETFs.” In another article, in the Financial Times, Hilary Lopez, head of EMEA third-party wealth at Goldman Sachs AM, said there was “significant interest and demand from wealth managers and private banks for active ETFs”, as Goldman is targeting a leading role in active ETFs in Europe. News of asset managers moving into the AETF space floods in daily.
However, Kenneth Lamont, principal at Morningstar, stated in the same FT article that “the surge into active ETFs seems driven more by fear of missing out than by any distinct advantage of the ETF structure, while the benefits for investors remain modest”. He has a point here. Also, and very importantly, it is not a free lunch ride at all. It can’t be done as a side-project. It is almost all-in or nothing. See our chart of the week below. As you may have sensed from previous newsletters, we have conducted deep dive analysis on this space, including tier-one fund buyer viewpoints and who the buyers actually are. Let’s talk if you want to know more.
Also in the semi-liquid private market space, new fund launches come in daily. Last week we already addressed a changed tone, nuances and more caution in Cannes at the IPEM conference. In this context, the following quote from Kerill O’Shaughnessy, partner at law firm A&L Goodbody, in an Ignites Europe article should be also considered: “The reputational risk of needing to gate a fund or not being able to meet the liquidity requirements that had been set out would be catastrophic for an asset manager’s private wealth ambitions.”
Last but not least – and very much in the context of not following the herd – Nicolai Tangen, CEO at Norges Bank IM published another fabulous podcast, this time with City legend Anthony Bolton: The mindset of a contrarian investor. See Link. “Popularity is risk”, and not necessarily a good advisor. This is something which, at least in our humble view, must be considered more than ever in strategic decisions about fund distribution and product focus.
