Theodoor Gilissen Bankiers
Though founded back in 1881, Dutch bank Theodoor Gilissen Bankiers N.V offers one of the more modern strategies. Theodoor Gilissen is the only party in the Netherlands to offer passive index products, says Lodewijk van der Kroft, director of Institutional Asset Management at Theodoor Gilissen.
Using an index-tracking model developed with Ortec Consultants, the firm has staff and systems in place to index portfolios professionally. Although index investment products is a huge and vastly competitive area globally, Theodoor Gilissen has found its own niche within this. By focusing on domestic clients, its passive products have an appeal that big players such as BGI, State Street and Vanguard do not.
“We are up against the usual international competitors, but most of them will ask clients to enter a pooled vehicle, such as one registered in Ireland or Luxembourg,” says van der Kroft. “This means it is quite difficult to keep the same fiscal status.”
And Dutch institutional clients do have a real interest in maintaining their Dutch fiscal status, he says. Keeping this has an impact on the amount that can be generated for clients through tax reclaim.
“The fiscal situation is still clear, so while clients gain from the added value that comes from using our methodology, they still have the opportunity to be benefit from Dutch fiscal status,” he says.Theodoor Gilissen is a member of KBL Group European Private Bankers - a network of specialists in private banking - and has offices in Amsterdam and The Hague.
Offering products which give the client complete transparency is a key aspect of Gilissen’s business. Normally, says van der Kroft, pension funds of around e40m would be most likely to invest in pooled index funds. However, in that case, the asset manager would recoup taxes based on their own fiscal situation and not that of their client. “This is not a look-through system,” he says. With e8.5bn in total assets under management, almost e2bn is held in segregated accounts for European institutional clients, including around e300m of pensions assets.
Most of Gilissen’s clients are charities, foundations and non-profit organisations, and around 20% are family offices and trusts. “We focus primarily on parties that have done an ALM study and feel they must invest in passive index products,” says van der Kroft.
By homing in on the smaller pension funds, Gilissen has the edge in the passive market. These tend to fall under the radar of the larger index product providers. Being a local player has distinct advantages. Reports, for example, are all in Dutch.
“As a small company, we have to make sure we have a tailored investment solution for clients,” says van der Kroft. And mostly, this is more flexible than could be offered by a larger firm.
“If the board decides they want to put more emphasis on a certain sector, it is possible to accommodate this,” he says. For example, the pension fund of a company specialising in information technology may be keen to avoid investing in the IT sector of the market. Tailoring an investment product in this way is understandably out of the question for the large providers, he points out.
There has been a lot of interest in the institutional investment market during the last few years in absolute return products, and van der Kroft acknowledges that this could affect a passive mandate proposition. But Gilissen is not allowing the trend to let it drift away from its core product offering.
“We don’t offer tilted products,” he says. “We don’t feel that is something we should be involved with.” In any case, the trend towards absolute return will not affect the entire investment base. Because it comes with very high costs, hardly any transparency, and involves very specific financial risks, it will never be a viable strategy in all cases, he says.