Values are changing rapidly in the world of asset management. Leaders come and go, but perhaps less so than in the past, and loyalty to a company is increasingly appreciated by clients, as a sign of commitment and stability.
● 2019-: President and CEO, Manulife Investment Management
● 2017-: Head of wealth and asset management, Manulife
● 2013-16: General manager, individual wealth management and insurance,
● 2010-16: President, Manulife Investments
● 2006-09: Senior vice president, Manulife
Manulife Global Wealth & Asset Management
● AUM: CAN$1trn (€708bn)
● Capabilities: fixed income, credit, equities, real estate, private equity, private debt, infrastructure, timber and agriculture
● 9700 staff across 19 countries
Still, there cannot be many senior executives of large asset management businesses who have spent three decades within the same company. Paul Lorentz, president and CEO of Manulife Investment Management, Manulife’s Global Wealth & Asset Management division, is one of the few.
Lorentz began working for the Canadian insurer in 1993. Today, he is overseeing the growth of the company’s investment management division into a truly global business.
As an insurer, Manulife already has a global footprint and a remarkably strong presence in Asia, where it has been operational for many decades.
It has also built its presence as an asset manager across the continent, serving both retail and institutional clients. In total, the overall business has 9700 employees, spread over many offices.
Manulife Investment Management’s presence in Europe as an asset manager is less established, partly because the company has operated under different brands.
Overall, Manulife Global Wealth & Asset Management has assets under management of CAN$1trn (€708bn). At the end of last year, it managed €480bn for external clients worldwide, according to IPE’s Top 500 study of global managers, taking the 41st place in the global ranking. However, the assets managed on behalf of European clients, mostly institutional, were just over €5bn.
The company acquired a number of established investment management brands through John Hancock, the Boston-based financial firm founded in 1862, which it bought in 2004. Investors in timberland and agriculture might recognise the name Hancock Natural Resource Group (HNRG), a specialist manager which rebranded under Manulife Investment Management in 2021.
The US insurer continues to operate under the same name domestically, but in 2018, the global wealth and asset management business launched a global rebranding effort that brought together the different brands operating in the asset management sector. The operation is now complete, but naturally it takes time for investors to realise the full scope of capabilities of Manulife as an asset management company.
“Because we have operated under different brands, the full remit of what we do has not been well appreciated. What is also perhaps not well understood is that some of our investment teams have been managing money for up to 30 years for the insurance company,” says Lorentz.
Thanks to its roots in insurance, the company has strong capabilities and a long history as a fixed income investor, particularly in credit. This puts it in good stead to address the need of clients worldwide that need to close pension funding gaps. “A lot of our equity strategies are also biased towards income generation, because we see that as a key client need”, says Lorentz.
Private markets push
The company also has a large private market platform, which Lorentz hopes will continue to deliver results and drive AUM growth worldwide. As well as significant track record in timber and agriculture, the company has an infrastructure equity business that is generating strong interest. The real estate business is also well-established. But Manulife also has private equity and private debt capabilities, including co-investments, secondaries, and senior and junior credit.
The diversified nature of the business helped maintain net flows positive for 12 of the last 13 years. While the client base in Europe is mostly institutional, the company has serves different types of institutional and retail clients, including both defined contribution and defined benefit pension schemes. Lorentz sees this as an advantage because of the complementary nature of the various client types.
“Having direct relationships with different types of clients means we can bring in different opportunities. For example, we know clients in the retirement space would benefit from a sleeve of private market investments, given that they are investing for 30 to 40 years and do not need liquidity. No one is really doing that yet for the mass market,” says Lorentz.
Lorentz points out that having a global footprint helps the company recognise the common needs among clients from different jurisdictions, and develop its capabilities accordingly.
“The markets we work in have different levels of maturity. However, having travelled globally, I recognise that a lot of the needs are similar, regardless of the market, whether clients need to close a funding gap or integrate sustainability in investment decisions. There are many learnings that can be taken across all markets,” he says.
Focus on sustainability
The company’s portfolios of timber and agriculture investments, for instance, are a response to the need for clients to de-carbonise and to earn de-correlated returns. They are also a good calling card when it comes to helping clients reach their net-zero ambitions.
“At the parent company level, we are already net neutral in Scope-1 and Scope-2 emissions, because of the timber we own in the portfolio that creates a natural offset to the emissions from our operations,” points out Lorentz.
Lorentz recognises that European investors are truly leading on ESG, as opposed to their North American peers. However, Manulife offers ESG solutions beyond timber and agriculture. One of its flagship capabilities is focused on sustainable fixed income opportunities in Asia.
The CEO argues that the company’s track record in terms of net client flows shows that these days, more than ever, client favour large managers that can deliver returns during times of stress.
However, taking the company to the next level, particularly in the competitive European asset management sector, is not going to be easy. But as well as track record, Manulife seems to bring a clear vision of where it can offer something valuable to institutional clients.
Lorentz says: “We always compare ourselves relative to other options available in the market, including passive alternatives. One of the things that differentiates us is that we do not try to participate in areas where we do not think we can generate sustainable alpha, such as the more liquid markets like US Treasuries, for instance. We do not try to be all things to all people.
“Our goal is to take our active, alpha-generating capabilities and make them available to investors in the format that they need,” says Lorentz.