EUROPE – Mellon Financial is looking to expand its European fixed income capability and also target small pension funds with a complete service offering this year.
Ronald O’Hanley, vice chairman at Mellon, repeated to IPE news that Mellon needed to grow its European fixed income assets under management to bring it on a par with its US bond fund managers. But O’Hanley ruled out developing property within its alternative assets fund managers due to the difficulty in building economies of scale.
The alternatives business has been growing in hedge funds, however, and Patrick Sheppard, chief operating officer of Mellon Institutional Asset Management, said its acquisition in mid-June of Connecticut-based Evaluation Associates Capital Markets would allow it to offer a complete service to smaller pension funds.
EACM has $2.7bn in funds of hedge funds and $1.8bn managers of managers investment strategies. Combined with Mellon’s global custody and fund administration businesses, Sheppard said the managers of managers would allow the company to market to smaller pension funds as a complete outsourcing service, which it would do later this year.
“Evaluation’s managers of managers is a long-only business with a great, 20-year track record. Combined with Mellon it makes us a unique firm - able to offer as a bundle to clients custody, back office administration and transfer agency with an open architecture investment management business. For small and mid-sized pension funds, which are often underfunded, doing these services in-house is too much risk and they want to leave it to the experts. We have already had a great response with €300m coming in, in six weeks and we have multi-billions in the pipeline.”