Asset management roundup: Deals, restructurings and disruption
BNP Paribas Asset Management is combining teams from three of its subsidiaries to create a Multi Asset, Quantitative and Solutions (MAQS) investment group.
The move is part of the manager’s efforts to streamline its organisational structure and enhance its range of products. Earlier this year it combined investment teams in a new group for private debt and real assets.
The MAQS group combines teams from THEAM, CamGestion and Multi-Asset Solutions. It will have more than €110bn of assets under management.
In a statement, BNP Paribas said the group aims to combine quantitative expertise with fundamental research capabilities, with risk management at the core of the investment philosophy.
Environmental, social and governance (ESG) criteria are also included in the MAQS group’s processes.
BNP Paribas said: “The creation of MAQS will help meet the growing needs of investors seeking innovative solutions in an environment of uncertainty and polarising demand between low-cost management such as indexed products, and high value-added products that encompass risk management, such as factor management and customised solutions.”
BNY Mellon combines big three US boutiques
BNY Mellon Investment Management is combining its three largest US investment managers to create a single multi-asset manager.
The multi-boutique manager is to combine Mellon Capital Management, Standish Mellon Asset Management and The Boston Company Asset Management.
The combined business will have more than $560bn (€476bn) in assets under management. This would rank it in the top 40 of IPE’s Top 400 Asset Managers survey.
The new business will be headquartered in Boston, Massachusetts and led by chairman and CEO Des Mac Intyre, currently CEO of US Asset Management at BNY Mellon IM.
The combination of the three businesses is expected to be completed within 12 months. A unified brand is to be launched later in 2018.
The individual companies’ processes and philosophies for their core strategies will remain substantially the same, but over time “will be enhanced via an optimised operational infrastructure and the addition of new analytical tools and research capabilities”.
Chief investment officers will be appointed from each business to maintain continuity of the investment process across all strategies, BNY Mellon IM said.
Industry open to second wave of disruption
The asset management industry is vulnerable to a second wave of disruption from technology firms, after a weak response to the first – investor adoption of low-cost index funds – according to Moody’s Investors Services.
Some market share had already been ceded to digital entrants, such as “robo-advisers”, and a template for digital disruption already existed in China, the rating agency argued in a report.
Four years since being launched for the digital payment system of Alibaba, one of the world’s leading technology firms, Yu’e Bao had become the largest money market fund in the world, Moody’s said. The fund has roughly CNY1.4trn (€180bn) in assets, according to a recent Bloomberg report.
“Though this growth has occurred in a digital payment-friendly country, it is likely to foreshadow events elsewhere,” said Stephen Tu, a Moody’s analyst and author of the report. “Large US technology firms are often cited as leading candidates to enter asset management. Amazon, Google, Apple and Facebook have an edge in distribution through their mindshare, lifeshare, datasets, advanced analytics and predictive modelling skills in combination with their ability to target users.”
However, as the potential for growth within the asset management industry was much smaller than in other industries, large technology companies would see involvement as complementary to their main businesses, potentially facilitating the collection of even more detailed and differentiated consumer behaviour data and client retention.
WisdomTree ramping up European ETP presence
Nasdaq-listed exchange-traded product (ETP) provider WisdomTree is to acquire the European operations of ETF Securities, excluding the latter’s exchange-traded fund platform.
The deal includes ETF Securities’ European exchange-traded commodity, currency and short-and-leveraged business. This covers $17.6bn of assets spread across 307 products.
According to a statement, the acquisition would take WisdomTree’s assets to around $66bn, making it the ninth-largest ETP sponsor and largest global independent ETP provider, with significant presence in both Europe and the US, the two largest ETP markets.
The sale is subject to regulatory approval and is anticipated to close towards the end of the first quarter of next year. It is a cash and shares acquisition that valued at $611m.
Under the terms of the transaction, ETF Securities would become the largest shareholder in WisdomTree.
Jonathan Steinberg, WisdomTree CEO and president, said: “The acquisition will immediately add scale, diversification and profitability to our business in Europe, the second largest ETF market in the world and a growing and strategically important region for us and the entire industry.”
Mark Weeks, UK CEO of ETF Securities, said: “This transaction creates a leading independent global ETP provider which is well positioned to compete in the rapidly growing European ETP market.”