Recently, Angelien Kemna took the paradoxical step at ING Investment Management of changing her role from global CIO to that of European CIO and at the same time CEO, sharing the rest of the globe with her opposite numbers in the US and Asia-Pacific. A move made so the group, with more than E500bn in assets and ranking 19th in world terms, can operate all the more effectively globally, she says, from her office overlooking The Hague.
Referring to the restructuring, she poses the question disarmingly: “why was this done since asset management is fundamentally a global business?”. But she is not finished there. “This in turn poses other questions – what exactly is global and how exactly are you going to make money?
“The one thing I have never accepted as global is obtaining opinions from across the world to build up your ‘one-house-view’. That just does not work – too many people are included and it certainly is not global in my view,” she says.
“What is global is using a limited number of investment engines, basically, one in the US, one in Europe and one in Asia-Pacific, and having the same investment style in their products. So in Europe, we decided to focus on European and global products. The US should deliver a good US products, enabling us to stop doing US equities here and to use their products with a similar style, so we can combine these with what we sell here. We did the same for Asia-Pacific.” Other asset managers would typically try to operate out of one location. “That’s what I see as global – being efficient and credible with respect to your investment engine.”
This is a process that requires the different elements in the group to learn from each other. “So they will exchange methodologies and make sure that what is offered to clients comes out of the same methodology.”
Kemna reckons the group is close to having one investment process: the house-style is GARP, which she describes as “active in style without being aggressive”.
“Though our house-style is active GARP, what we want to do is to bring it more closely together so we can benefit from each other. In the US we have a more sophisticated screening device, with more variables than in Europe. While in Europe, we have elaborate stock rating systems based on fundamental and cash flow analyses at company level.” This is being worked with the team in the US to see what can be developed. “In Australia, they are already working with this,” she says. “So though our house-style is the same and we are speaking the same language, our instruments are still a little bit different and so we learn from each other.”
Another aspect to being global in her view is that of finding products within parts of the group that can be exported to other markets. “So the international equities product that we make here, we can transport to the US. Now our complete international range is being sold in Australia and Italy, ” she says, adding that, of course, requires having client and servicing agreements setting out how the different regions will benefit from each other. “This can only work, where mutual benefits are seen on both sides.”
Kemna believes that the more assets under management any product area can attract means the cheaper it can be made, which is advantageous to everyone. “Having what exaggeratedly referred to as a ‘global platform’ only works where there are benefits to both sides.”
She sees the process of going global as one of learning and leveraging from one another. “By introducing US-produced equity products in Europe and Australia, the group in the US has already obtained several mandates directly from clients here.” And she travels to the US making presentations to consultants and potential clients about the international products made in Europe. “We are selling an increasing amount of the international product range in the Asia-Pacific area, having being particularly successful with our open-end guarantee product.”
So seeing successful development on the global front, why then did the investment management operations restructure onto a regional basis? She laughs. “I do not know if this is just an ING phenomenon, but we noticed that while we have a presence in 25 countries, we were not able to access the distribution potential of the group for our products. We could see so much distribution capability, but when it came to execution it did not happen for one reason or another.” The situation would be one of ING IM people sitting in these offices in different locations but with insufficient connection with the local operations. “We were missing our market share on the asset management side.”
By going regional, the question is posed to the local operations “why are we not using you in investment management more?” As Kemna sees it the regional move means: “You are much more in the communication loop and people are more aware of you”. The poor market conditions are giving a new motivation to make everything work that the group has going for it. “Given the potential distribution we have in a number of countries, currently we are below our market share,” she says, clearly determined to put this right.

Growth in markets is going to be zero or thereabouts, so it is only by increasing market share that the group can advance. “Growth is going to be limited to a few product areas.” The best way to survive as an asset manager operating internationally is to grow to this “natural market share” in the different markets.
Kemna believes the regional approach will make this work. The key is having a marketing person, below the global marketing level and focusing on the European area, who is responsible for all the initiatives in the region. That person talks to “our local distribution channels, the third party distributors, to our global client unit, to our third party fund unit, to institutional clients with real estate, to cross regional selling operations and ING Direct. And these are just our internal channels.” It is a question of reshaping things within the region to benefit from any initiatives being put in place. “Internally, people were not aware of all the potential approaches within the group. On occasion in the past, you could be seen as a competitor, instead of being one of the team as we now are – the important thing is that there is a benefit for both. People just did not see that before.”
All the asset management in the group is now done basically within the investment management company, but not everything is centralized, she points out. “So if you insist that the investment engine is located centrally, you will lose commercial opportunities locally. When it comes to asset management it is done within investment management operation – we don’t have people doing their hobby.”
As the operation is constituted now within Europe, the equity fixed income split is 50/50, she says. As at mid year, the group’s total AUM were divided 37% equities, 53% fixed income 6% real estate and 4% cash. But ING group is unlike most other insurer-owned investment manager in that now only one-third of the assets are handled for the insurer, with the other two thirds coming from retail and institutional sales and from private client operations. “This makes us here a fully fledged third-party oriented investment manager.” This she acknowledges took the group a long time. “In Europe, we have a more diversified client base than many independent equity managers offering a range of equity products.” In the US, the emphasis is more towards insurance based fixed income, while in Asia-Pacific business is more diversified away from insurance, she reckons. “Australia is where we have one of our most professional businesses in the region – it very international.” In the case of an independent asset manager, the focus is just on what they can obtain from each market, whereas with ING group it is on the leverage that can be gained from the existing businesses.
In Kemna’s view the days of fund open architecture are all but gone. “We were working towards this, but the movement in this direction has really slowed down.” Asset managers have to use every effort to market their own products in current conditions. Brand recognition only gets products so far in her view.
Since the investment management provides products at cost to the group, she says she needs both retail and institutional business. “I need both retail and institutional business to cover costs and to maintain quality. They influence one another. Both are now converging strongly together. I call my own distribution channel an institutional client as I have to give them that level of service.” Third party distributors are institutional clients. “But you do need to know the ultimate client type on the other side.” The growth of consultants on the retail side, as in Australia, and a trend that could happen in Europe, will drive all business to being institutional longer term.
Looking forward, Kemna sees the business building on its “investment engines”, but moving more into alternatives, developing on what it has already in the US. “In our global product range we have active and enhanced strategies based on global sectors, and I see us pursuing that aggressively. Enhanced and active are our playing fields.” But there will be opportunities for niche products. But the key over the next few years will be the successful linkage with the group’s distribution channels. On the negative side for ING, are the continuing bear markets, she says, and on the positive side: “We don’t have any complicated integration process going on as others have, so we can focus on what we have to do.” But on future expansion by acquisition, she just says that you can never say never.