Opinion  

Barings can finally build on its heritage

Dan Jones

It’s easy to forget that a sizeable proportion of the names in UK fund management haven’t been around for all that long. And by that I mean the companies themselves, rather than their so-called ”star” managers.

Branding has always been big business, and it’s growing because so many firms are new players. But names rarely count for much on their own. Asset management’s measurability should mean stature is built on performance. Get enough products to deliver the goods and only then are investors more willing to take a punt on other funds.

Nonetheless, I don’t doubt many in the industry will still have a fondness for the Barings name and its 250-year heritage. From a vantage point of two decades, even the bank’s 1995 collapse looks like just another odd tale in its storied history.

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This history lives on through Barings Asset Management, of course. Of late, however, the business has faced a difficult time composing the next chapter: Its decision to make an early start on the multi-asset story was a canny move, but the departure of managers Percival Stanion, Andrew Cole and Shaniel Ramjee to Pictet in 2014 left it with an unexpected case of writer’s block.

Barings has moved on since then, bringing in managers from the likes of Schroders and Sarasin to strengthen its teams.

But with the exception of its European equity propositions, retail flows have been hard to come by. Irrespective of investment returns, it’s found itself squeezed between the bigger players and the boutiques offering something a bit different.

So last week’s news that Barings will merge with three sister firms is significant. To the outside world, US insurer MassMutual has looked more like a sleeping partner than a proactive parent since buying the fund group from ING in 2004. That has now changed.

The new entity adds on three US firms – fixed income manager Babson Capital, Cornerstone Real Estate Advisers, and real assets manager Wood Creek Capital – and will use the Barings name.

But Barings will effectively be under new owners: it will be headquartered in the US, and run by Babson’s chief exec and chairman. Not surprising, when you consider Wood Creek and Cornerstone are already subsidiaries of the bond specialist, meaning it commands £155bn in assets compared with Barings’ £25bn.

So it’s another transformation for the historic brand. Will it work? US companies’ attempts to export strategies across the pond have had mixed success, but the extra capabilities look promising.

US real estate is not the asset class for UK intermediaries, but Cornerstone already owns a swathe of European properties. Flexible fixed income will be of interest, and Wood Creek can offer alternative income streams to sophisticated investors.

The biggest change of all is the fact that Barings has the firepower to take on the UK market once again. If it can deliver on performance, it may truly be able to turn the page.