It’s been a pretty quiet month in fund management, all things considered. The industry appears stuck in limbo, waiting for the major political and regulatory changes of the months ahead, considering how to respond to the latest sign of a structural shift to passive products, and hoping for investor appetite to return.
The exception is perhaps the merger between Henderson and Janus announced at the start of October.
We’ve seen plenty of comment already to the effect that this is a ‘defensive’ combination, borne in part from some of the pressures outlined above. There’s another motivation, however, which has attracted less attention.
The deal is complementary, we’re told, because Henderson has little presence in the US and Janus likewise in Europe. It’s worth considering that rationale in more detail.
The acquisition model increasingly looks like the only option for overseas playersDan JonesSet aside Henderson’s own expansion plans – and indeed Janus’s efforts in continental Europe – and this looks to me like yet more evidence that asset managers from abroad face an insurmountable challenge in trying to start a UK business from scratch.
True, Janus has had a pretty hard time of it in recent years. But it’s not the only big name to have tried its hand on these shores of late.
Who are the winners from this push, from a retail and wholesale perspective? Who has caused UK firms to sit up and take notice? Not T Rowe Price, one of the largest fund managers in the US. Not Carmignac, for a long time one of the European industry’s standard-bearers. Plenty more, like PGIM (Pramerica) and Candriam, are arriving even now. But at the moment, I struggle to identify any success stories at all – not compared with the asset gathering efforts of the domestic fund houses pushing into Europe, at least.
Some of these firms have funds which have performed well, as our 100 Club memberships of recent years have shown. But there’s a different kind of barrier that seems to get in the way of UK success. Is it too reductive to dismiss it as “cultural”? Fund managers based overseas probably don’t help, nor does a UK fund buyer community which is much more fragmented than that in Europe.
It may not simply be down to a saturated marketplace, either. Boutique fund managers may be under threat from an evolving industry, but we’ve seen enough successes in recent years to show these types of firms can triumph where overseas giants have failed. And the winners aren’t just “star” manager juggernauts – look at the rise of TwentyFour, for example.
The fixed income house is also a good example of what happens next. It sold a controlling stake to Switzerland’s Vontobel last year. This, to me, is one of the most significant conclusions to draw from the Henderson deal: the acquisition model increasingly looks like the only option for overseas players who still view UK active management as an attractive playground.
Dan Jones is editor of Investment Adviser
