GERMANY – Mellon Financial Corp. is the biggest winner in HVB Group’s decision to launch the first ever German multi-manager programme for institutional clients, by winning seven of the 24 asset management slots available as well as other business, including custody.
HVB today announced it was launching a German multi-manager programme for institutional clients, with 12 individual funds covering separate asset classes, each of which will have two specific asset managers. Of the potential 24 asset management berths, Mellon’s asset management subsidiary Mellon Global Investments, has won seven.
“Our main target clients are European banks, insurance companies, pension funds and other institutional investors managing assets ranging from 200 million euros to four billion euros and who hope to rationalise and restructure their asset management activities,” said HVB board member Stefan Bub in a news release
The new programme is structured as an Irish UCITS umbrella fund with variable capital. “Clients can individually select the asset allocation that suits their needs, and may adjust their selections easily,” HVB said.
HVB’s managing director of institutional Axel Gruber said the selection criteria for the asset managers were performance and quality. HVB saw between 60 and 80 asset managers as part of the selection process, he said.
Gruber said the programme will be domiciled in Ireland because of the quality of the infrastructure and the “flexibility of the regulator”. HVB needed a non-domestic vehicle for the programme he said.
He declined to comment on the value of the custody and asset services contract with Mellon.
The asset managers are: Mellon; Blackrock International; Boston Co. Asset Management; Fischer Francis Trees & Watts; F&C Emerging Markets; Goldman Sachs Asset Management International; J P Morgan Fleming Asset Management (UK); Lloyd George Management (Europe); Martin Currie Investment Management Co.; Wellington management Co.; Unigestion.
Gruber declined to say which managers are to manage which portfolios, though Mellon said in a news release that it is to manage the following seven portfolios: global high yield Bond, global bond, European bond, emerging markets equity, emerging markets bonds, US small cap and US bond.
As well as asset management, Mellon, via its various arms, will also provide extra services. Mellon’s joint venture with ABN Amro, ABN Amro Mellon Global Securities Services, will provide the global custody component. Transfer agency will be carried out by Mellon Fund Administration (Dublin). Mellon Trustees (Dublin) will act as trustee, while Russell/Mellon CAPS will measure performance.
HVB’s Bub said: “Mellon is able to provide us with an end-to-end asset servicing solution and has clearly demonstrated the value of its ability to integrate these services into a coherent and effective offering.”
Bub saw the multi-manager market growing. “Already today the total market for multi-manager products worldwide is around 500 billion dollars, a figure we expect to increase substantially within the next few years.”
HVB's 12 funds are:
Emerging markets debt
Emerging markets equity
Global high yield bond
Japan equity yield
North American equity
North American small cap
Pacific Asia (ex-Japan) equity