GERMANY – FERI Institutional Advisors plans to break into the Swiss institutional market sometime in 2006, according to Arnd Thorn, who took over as FIA’s chief executive last August.
In an interview with IPE, Thorn acknowledged that the market was challenging due to the predominance of local consultants like Complementa, PPC Metrics and Ecofin.
But he said: “There is plenty of opportunity for us to expand our presence there.”
He did not give a precise timeframe for the move and added that the firm would not, initially, set up an office. In 1999, Switzerland’s pension market alone had €257bn in assets.
Meanwhile, back in Germany, Thorn said FERI had not only replaced recently lost staff from its investment consulting team but actually had enlarged the team. Thorn himself joined FERI from the German arm of PIMCO, which is part of Allianz Global Investors.
“It’s always unfortunate when a house loses good people, but we have more than made up for these losses and the fact is we didn’t lose a single institutional client,” Thorn told IPE at FERI’s headquarters in Bad Homburg, a suburb of Frankfurt.
According to Thorn, FERI currently employs about 20 investment professionals. They advise institutional clients on all relevant asset classes, including alternatives like private equity, hedge funds, commodities and structured products.
A recent FERI study on hedge fund investment reflects that German institutional investors plan to raise their exposure to the asset class to about 1% of total assets from 0.3% currently.
Last summer, FERI lost four investment consultants, three of whom defected to international consultant Watson Wyatt. IPE first reported that one of these three, Torsten Köpke, was recruited by Watson Wyatt to head its new investment consulting practice in Frankfurt.
Quite apart from losing institutional clients, Thorn stressed that FERI had continued to acquire them, including two German pension funds just this week.
The clients are Versorgungswerke, or pension funds that serve certain professional trades like physicians, dentists and lawyers. Between them, they have €7bn in assets.
“In other words, we have continued to defend our leadership in the German market. If you add up all of our institutional clients, you will see that they represent between €250bn and €270bn in assets,” Thorn said.
Thorn declined to comment on Watson Wyatt’s efforts to replace it as the incumbent advisor to energy giant E.ON, which is creating a contractual trust arrangement for €5.4bn in pension liabilities.
But Hartmut Leser, a managing director of FIA who was present at the interview, did say that like other consultants, FERI would do its utmost to win mandates in Germany’s CTA market.
According to Deutsche Asset Management, that market is expected to total at least €15bn in 2006. E.ON and the chemical giant BASF, which is using a CTA for €3.7bn in pension liabilities, represent the biggest mandates.