CHICAGO -- Banking giant ABN AMRO N.V. has set its sights on the U.S. pension fund market.
ABN AMRO Asset Management Inc. has begun targeting U.S. tax-exempt institutions, after combining its money management operations into one group, and dropping its hunt for another U.S. money management firm.
Included in the combined firm were the operations of La Salle Street Capital Corp. and the money management subsidiary of The Chicago Corp., which was purchased in 1995.
The push for growth in U.S. assets under management will come through the firm's Chicago offices, with an initial emphasis on the firm's global and international equity styles.
"We are going to seize a top-tier position in the U.S. market within three to five years," said Johannes N.A. Specker, senior vice president and director of international asset management.
Creating a strong position in the United States is key to ABN AMRO establishing itself as a true global investment manager, he said.
Worldwide, ABN AMRO already manages $72 billion, which includes $23 billion for institutions and $32 billion in mutual funds. About $6 billion of that is for U.S. tax-exempt institutions.
ABN AMRO as a bank has made money management one of its three main profit areas, the other two are commercial lending and securities brokerage, Mr. Specker said. He relocated to Chicago in September from ABN AMRO's Amsterdam headquarters to work on the U.S. growth plan.
In anticipation of asset growth, firm executives expect to add as many as 10 marketing professionals, along with appropriate support personnel, during the next two years, said Richard A. Frodsham, executive vice president and director of marketing and administration. Mr. Frodsham had been a senior vice president with The Chicago Corp.
While the firm's money management headquarters will remain in Amsterdam, Chicago will serve as its U.S. base of operations.
Mr. Frodsham said ABN AMRO chose its growth strategy after strongly considering the purchase of a very large investment firm.
Among the firms it considered buying were Chancellor Capital Management and RCM Capital Management, San Francisco, Mr. Frodsham said. Chancellor was bought by Liechtenstein Global Trust, bank parent to LGT Asset Management, and now is for sale again. RCM was bought by Dresdner Bank AG, Frankfurt. (See related stories on pages 14 and 49.)
But ABN AMRO executives believed it would be easier to buy a midsized firm and increase its size than to assimilate a huge established firm into ABN AMRO's culture.
Having dropped the idea of purchasing a money manager, they've begun the effort to grow its U.S. asset base. "We believe this is the optimum blend of buy and build," said Annette C. Calderwood, senior vice president and director of consultant relations. Ms. Calderwood joined ABN AMRO after leaving Murray Johnstone International, where she was director-institutional marketing, in April.
Initially, ABN AMRO will focus on global and international equity offerings, run out of Amsterdam, and will rely on bottom-up research from its 23 investment offices.
The offices feed investment analysis and research into regional investment centers in Amsterdam, Chicago, London and Hong Kong, Mr. Specker said.
The strategy seeks out industries that will benefit from "megatrends" developing in the world economy, and finding the top global performers in a given industry that can benefit.
Its top-down decisions are made with significant interaction with its local offices that do bottom-up analysis of countries and companies.
For example, decisions for U.S. investments will be made with input from the Chicago office, which is headed by Charles R. Klimkowski, executive vice president and director of investments. He was chief operating officer with Chicago Corp. before the reorganization.
But pure U.S. assignments will be run directly out of the Chicago office, which now manages about $6.2 billion.
Likewise, Asian portfolios are managed out of Hong Kong.
Performance for its global strategies has been good, ABN AMRO executives said. They declined to provide specifics because of temporary regulatory concerns.
As part of its effort to lure more assets, the company plans to introduce next year a U.S. registered mutual fund using the global strategy. The fund will be within its Rembrandt family, a $2.4 billion family of no-load funds, which are distributed through discount brokers, ABN AMRO banks, and directly to retail investors, Mr. Frodsham said.
Firm executives also are exploring ways to leverage its global presence. ABN AMRO will be introducing a real estate investment trust at the beginning of next year, and will consider offering global REIT funds for U.S. investors as well, Mr. Klimkowski said. ABN AMRO already offers global REIT funds to European investor, he said.
ABN AMRO might be making the right decision in going after global and international assignments. "There's a demand for international and global equity products," said Greg Hazlett, director of research with Investment Counseling Inc., West Conshohocken, Pa. "That as a strategy makes sense."
