UK - Capital International, the UK arm of reclusive US-based asset manager Capital Group, says it is rethinking its strategy as its traditional defined benefit pension fund business reaches maturity.
It swung to a loss of £575,234 (€683,548) in the year to June 30 2008, from a profit of £18.7m a year before, according to company accounts filed recently. The loss follows a series of UK pension funds terminating mandates with the firm. The unit's chairman Michael Ericksen retired last month, replaced by Andrew Barth.
"As part of its business planning, the company has evaluated the risk that the business environment for asset management services in the UK and other markets in which it operates may not be optimal in future for the products and services which it has traditionally concentrated on," Capital said the filing. "Accordingly the company is adapting its business offering."
A spokesman clarified this, noting that its traditional defined benefit pension fund market is becoming mature with the shift towards defined contribution plans. While DC was still a small percentage of assets, Capital has made its funds more DC-friendly, he said.
Another factor was a shortening of the time clients that retained managers, the spokesman said, due in part by new accounting standards. He added Capital maintains good relations with investment consultants.
"The process is the same, the philosophy is the same," he said, asked about Capital's investment process. He said the firm has had periods in its history where it has underperformed. "But we've always bounced back strongly."
Capital was founded in 1931 and was the subject of a 2004 book - 'Capital: The Story of Long-Term Investment Excellence' by Greenwich Associates' Charles Ellis. He called Capital the "finest professional firm of any form in the world".