AMSTERDAM - Manager-of-managers firms are getting ready to scoop up new business in the Netherlands.
Frank Russell Co, Amsterdam, already has seen its Dutch assets under management jump 35%, to $515 million at the end of 2002 compared with $380 million at the beginning of the year, said Oscar Pesch, manager client service and sales. New money from Dutch clients was $260 million, compared with $200 million in 2001.
Only last week the firm won a mandate for around e25 million in emerging market, Pacific Basin and Japanese equities from the €500 million Stichting Pensioenfond Wolters Kluwer Netherlands, Deventer. Another Dutch client is in the pipeline, said Mr. Pesch.
And Karl Dasher of SEI Investments (Europe) Ltd. believes the Dutch market is so attractive he plans to set up shop there by the end of this year. Mr. Dasher, managing director for continental Europe, said he hopes to hire between three and four people to staff the office and begin roaming the Netherlands and Belgium in search of new clients.
Local industry experts say pension plans increasingly are receptive to manager-of-managers structures and specialist firms as they consider moving away from balanced management (Pensions & Investments, Jan. 20).
Last month, Dutch insurer Aegon finalized its acquisition of TPG KPN, Gronigen, which administers and manages plans with a total of €6 billion in assets for employees of Royal KPN N.V., The Hague, and TPG Post, Amsterdam, the Netherlands' telecom and postal services groups.
The deal gives Aegon a manager-of-managers structure and a pensions administration platform catering to large pension plans. The insurer plans to offer TPG/KPN's manager-of-managers service to its clients alongside its existing asset management services, said Frans van der Horst, head of business development at Aegon Asset Management Netherlands, The Hague.
At this stage, Aegon is still working out the details of how to integrate the TPG/KPN business alongside its existing asset management operations, he added.
To date, Aegon has been mainly known in the Dutch market for managing balanced mandates although it recently started offering specialist bond products, Mr. van der Horst said. The acquisition of TPG/KPN also will help in winning business from larger pension plans. Traditionally Aegon's natural client base has been midsized plans, he added.
Willing to outsource
According to Frank Russell's Mr. Pesch, small and midsized pension plans increasingly are willing to outsource the monitoring and selection of money managers so executives can focus on strategic issues facing the fund.
The introduction of onerous funding and reserve calculation rules by the Dutch pensions regulator means plan executives have less time to spend keeping an eye on their money managers, he said.
Many pension plans also are starting to look at manager and style risk that might be inherent in the way they traditionally have run plan assets using one or perhaps two balanced managers.
After the swings in the capital markets of the past five years, many Dutch pension plans are keen to take a style-neutral approach. Some of the Netherlands' leading money managers generally are considered to manage their portfolios with a growth bias, said Mr. Pesch.
Jaap van Wieringen, head of investments at the Wolters Kluwer pension plan, said the fund appointed Frank Russell to reduce style and manager risk.
Until the beginning of this year, the plan's equity assets had been 100% passively managed by State Street Global Advisors, London, and Barclays Global Investors, Amsterdam, he said.
"We felt that active management may offer better results than passive management but only if it was structured in a risk-controlled manner. ... The combination of more managers in one region will reduce our risk in active choices," he said.
The plan decided to manage assets actively in emerging markets and Asian equities because these markets are less efficient and may offer greater opportunities for outperformance compared with passive management.
"Perhaps in the future we will change (the asset management for) the other regions but we are very happy with our index management," he added.