HSBC puts best foot forward

LONDON — HSBC Holdings PLC is set to launch a major attack to win over more pension fund assets as part of a global facelift of its asset management business.

The London-based firm has embarked on an extensive hiring spree in the United Kingdom to shore up two of its asset management businesses — HSBC Investments (UK) Ltd. and HSBC Halbis Partners (UK) Ltd., both in London. The main thrust of the recruitment drive has been to develop a worldwide multimanager business.

"We've completely refocused our strategy, and our recruitment, to areas in which we'd like to be global leaders," said Farley Thomas, global head of business development for London-based HSBC Group Investment Businesses, which had $300 billion in assets under management as of June 30. (HSBC Group Investment Businesses is the umbrella division encompassing both HSBC Investments and HSBC Halbis.)

The redevelopment of the two U.K. businesses follows on the heels of the 2005 launch of the New York-based HSBC Halbis Partners (Pensions & Investments, Oct. 31), which specializes in high-alpha strategies and had $86 billion in assets under management as of June 30.

Both HSBC Investments and HSBC Halbis are part of a broader overhaul that began in 2004 with the breakup of HSBC Asset Management Ltd. into four smaller, more focused parts. The current restructuring also includes the other two units, Paris-based Sinopia Asset Management, which is HSBC's quantitative and structured products business, and HSBC Specialist Investments Ltd, London, which concentrates on real estate and infrastructure strategies.

"This is a break from the past," Mr. Thomas said. "We've gone from a firm doing pretty much everything to (four) firms each with very clear roles and responsibilities."

Philip Glaze is set to join HSBC Investments in September as head of multimanager research, capping off a recruitment drive in the multimanager division. Mr. Glaze was director of research for Europe at Russell Investment Group in London. HSBC Investments also announced this month that Adam Fairhead would join the firm as global head of product development, also a new position. Mr. Fairhead was at JPMorgan Asset Management for 20 years, most recently as head of industry development.

These hirings follow a string of other appointments this year that include Joanna Munro as global chief investment officer, Kathleen Currie as head of liability-driven investing and James Hughes as head of HSBC's multimanager business.

Specifics for new multimanager strategies are still being developed, but HSBC Investments is pitched as the "polar opposite" of the boutique-style HSBC Halbis, Mr. Thomas said. Where HSBC Halbis is a relatively concentrated U.S.-led team focused on an institutional base, HSBC Investments is a global network aimed at packaging the right investment strategies to market to a broader audience of institutional and retail clients. In the U.K. recruitment drive, the bank also strengthened its capabilities in high-alpha, emerging markets and European equities.

Mr. Thomas would not identify any new clients the multimanager business has gained.

Consultants on both sides of the Atlantic who are following HSBC's transformation are taking a wait-and-see approach.

George Henshilwood, London-based partner who has researched managers of managers at consultant Hymans Robertson LLP, said: "We find, as consultants, that the field is crowded with some of the biggest (managers of managers) struggling."

Although trustees' interest in multimanagers is increasing, Mr. Henshilwood hasn't seen a rush by institutional investors in the U.K. to invest in such portfolios. However, he believes multimanager strategies particularly appeal to defined contribution investors, a group that will become more important in the future.

Other consultants questioned why HSBC has taken so long to push asset management and wondered whether acquisitions might be a faster and more efficient way to expand.

"It is really too soon to determine the level of success they have achieved," said Burton Greenwald, president of BJ Greenwald Associates, a Philadelphia-based financial services and mutual fund consultant. "Of all the international banks, HSBC has failed to become an important player in asset management, either institutionally or on the retail level."

Some of its peers in banking have been far more successful in asset management. San Francisco-based Barclays Global Investors NA had $1.51 trillion in global assets under management as of Dec. 31; JPMorgan Asset Management, New York, ran $841 billion in global assets at year-end 2005; and Chicago-based UBS Global Asset Management recorded $581 billion in assets under management at the same time (Pensions & Investments, May 29).

"This attempt (by HSBC) over the past year reflects their appreciation of this gap," Mr. Greenwald said. "It does signal they are taking significant action to remedy the problem."