US bank JP Morgan has confirmed that it is closing down its German ‘master fund’ business more than three years after launching it.
In a German master fund, the back-office administration of an institutional investor’s funds, such as reporting, is done by a single service provider. The aim of the process is to reduce costs and boost transparency.
“We invested in the Master KAG in anticipation of the German market evolving to adapt to a model of integrated custody and fund administration,” JP Morgan said. “Demand for this model has not proved as strong as expected and many clients are favouring an unbundled model so we have decided to exit the business.”
It added that closing the business, which had €4.3bn in assets under administration, would in no way affect any of its other fund business in Germany.
Industry sources told IPE that other master fund providers in Germany were already bidding for JP Morgan’s clients.
When it launched its master fund in September 2003, JP Morgan aimed to make the business profitable within two years.

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