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Capital International ‘has more to do in Europe’

EUROPE – Ratings firm Fitch Ratings says reclusive US-based asset manager Capital International still has “further additions” to make to its European business.

“To achieve its objectives of client diversification and European market penetration, the company changed strategy in 2002/03,” Fitch said in a report on Capital, the world’s third-largest asset manager.

“It structured a range of dedicated funds for its institutional clients and enhanced its Luxemburg sicav, which is distributed by major private banking networks and targeted primarily at high net worth individuals.

“Such changes required additional resources and although the onus remains on service quality, further additions are required.”

The report’s author Isabelle Cardon told IPE that the "additions" relate to internal communication and reporting rather than services to investors.

She explained that in launching the European subsidiaries, Capital had embarked on a new “distribution platform” exercise to find synergies and neutralise costs and will need extra human and technological resources in the future.

Fitch rated Capital’s European investment operations an 'AM1' rating. It said that Capital‘s subsidiaries, Capital International SA in Geneva and Capital international Ltd. in London, managed assets of almost €61bn at end-September 2004.

The agency continued in a statement that the top rating reflected Capital's “solid track record in managing institutional mandates” as well as the strong stability of the general organisation and “marked growth” in assets under management.

Fitch also praised Capital for its research quality and financial and operational risk controls. It also backed the way the firm diversifies its portfolio management.

“Capital International stands out from other investment companies as a result of the diversification of the profiles of its portfolio managers,” Fitch said.

In November last year IPE reported Greenwich Associates founder Charles Ellis as saying that Capital is the “finest professional firm of any form in the world”.

The asset manager has been tapped in the last few months by Denmark's Pen-Sam and the Second Swedish National Pension Fund or AP2.

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