Pickerell looks to extend Nikko’s multi-local approach
Nikko Asset Management has gained an enviable reputation in Japan for the quality of its product delivery and the loyalty that its corporate marketing engenders. It is an inclusive, highly client-focused approach that places fund investing as an integral part of your lifestyle.
It’s an ethos that is not unfamiliar to Blair Pickerell, Nikko’s Head of Asia, who has spent much of the last 25 years doing a similar thing in other parts of Asia, notably in Hong Kong and Taiwan.
Nikko’s recent success is largely the result of having top executives with experience of global asset management firms; specifically Tim McCarthy, who is chairman of the group, and Bill Wilder who is president and CIO. Both men came from a background strong in mutual fund sales, at Jardine Fleming and Fidelity.
Of course, Nikko has been operating outside of Japan for a long time. It has had offices in Singapore, New York and London for the past 20 years. It launched the first open-ended China A-share fund outside China and was the first AMC to be approved as a QFII.
Pickerell says Nikko AM has a ‘multi-local’ strategy in the region. It has expanded its business footprint recently by acquiring DBS Asset Management from the Singapore-based DBS Bank group, and Tyndall Investments from Australian conglomerate SunCorp. The Tyndall deal is now complete and Pickerell says the company will maintain its highly-rated investment approach and portfolio management style focused on Australasian equities and fixed interest funds, under the Tyndall name. Once the DBS deal is completed, the Nikko group’s AUM is expected to top $150bn.
Pickerell says the Nikko Asia strategy has two mains planks. “Firstly, to be the leading manufacturer of Asian equities and to a lesser extent fixed income funds sold to the world. So if you are a pension fund, a sovereign fund or an individual investor and you think of investing in Asia, India, Japan - hopefully Nikko will be at the forefront of your mind.
“The second part of the strategy is to have very deep distribution channels into the rapidly growing middle classes of Asia. We are firm believers that Korea is not Australia and you can’t take the same approach across the region. We don’t believe in having a global head of sales. If you are the sales manager in your country, you will be given full responsibility.
“So the style we have adopted is a federation of asset managers, operating within the Nikko organisation, but with local characteristics where appropriate. If we buy an asset manager with a strong brand, we will attempt to retain the name and build on it.” That is the strategy Nikko plans to follow with Tyndall. It is not yet clear what will happen to the DBS name once that deal is completed.
Pickerell is very much a product marketing man. He understands the importance of differentiating your product, but emphasises it is like any consumer product; you must create a strong competitive ethos, a reputation for quality and consistency, so that it’s not necessarily important for the client to understand what goes into the product, only that they know they can trust the company behind it.
“Western asset management companies are driven by the portfolio managers,” he says. “That is, the engineers are running the shop. In Asia, resistance to creating what the investor wants will result in failure. The fund product is no different to buying shampoo or beer. If you see a brand you like, you will pick that one.”
Having spent a great deal of time carving out fund markets in Asia, Pickerell also understands the local mentality. Although most recently employed as CEO of Morgan Stanley Investment Management, he is probably best known for stints as Chief Executive, Asia Pacific for HSBC Asset Management and as Chairman of Jardine Fleming Unit Trusts.
The cultural fit with his current employer is cemented by the fact that he and Tim McCarthy are close contemporaries. Both are from California and though they have not worked together before, McCarthy succeeded Pickerell at Jardine Fleming.
So how does a Japanese fund manager create an international brand value that sets it apart from the competition? Pickerell suggests that if you had asked mobile phone users three years ago how any of the phone companies could differentiate themselves, many would have said it was not possible; that they were all much of a muchness. “So how is it that Apple, with no previous track record in the phone market, stepped in and stole a large market share? It just shows what is possible. One thing in our favour is that we have a thorough understanding of the Asian consumer.”
Nikko is in a solid position financially and will most likely be announcing new acquisitions once the two current deals have been absorbed. Pickerell says, “We have cash and no debt, so we will be looking to extend in other parts of the region.” The group has a 40% stake in the Chinese group Rong Tong Fund Management. With offices in Hong Kong and Singapore as well as Japan, plus the recent acquisitions in Australia, New Zealand Singapore and Malaysia, Pickerell says the obvious gaps for Nikko are Korea, Taiwan and India.