Money managers are building their European businesses even as the sovereign debt crisis has scared away firms from making investments in the region.
Executives at these firms see the crisis environment as an opportunity to grab market share — and talent — away from bank- and insurance-owned European competitors that have long held the bulk of institutional and wholesale assets in vise grips.
The crisis “is actually helping the asset management industry in Europe,” said Benjamin F. Phillips, partner at money manager consultant Casey, Quirk & Associates LLC, Darien, Conn. “Global firms are committing more to continental Europe now than we have seen anytime in the past five years. It's a very specific (country by country) strategy and one that's thoughtful (about) potential revenue.”
Some U.S. firms, eager to diversify their businesses globally, have gotten a piece of the action. William Blair & Co. LLC, Prudential, MFS Investment Management Inc. and T. Rowe Price Associates Inc. have seen European ex-U.K. assets under management increase by 50% or more in the three years ended March 31, according to data from eVestment Alliance, Marietta, Ga.
To be fair, the MSCI Europe ex-U.K. index also rose about 50% in that period, the earliest quarters of which include the post-financial-crisis rally.
In the 21/2 years to March 31 — when the index declined 3.2% — William Blair's European assets more than tripled, Prudential's more than doubled and MFS' rose 35.6%.
Australian firm First State Investments' European AUM in that period jumped 44%, while AUM at London-based bond manager Rogge Global Partners PLC rose 68.1%.
“It's been a pretty strong growth period,” said James J. Sullivan, senior managing director and head of fixed income at Prudential Investment Management, Newark, N.J., which does business in Europe as Pramerica Investment Management Ltd. Mr. Sullivan said Asia is growing the fastest in terms of assets at the firm, but Europe is growing fastest in terms of the number of new clients. Compound annualized AUM growth in institutional fixed income across the firm over the past three years is 24%, and for five years, 20%, he said.
“It's a good time (to expand). Because of the turmoil going on in Europe, we're seeing a strong pool of talent that is available,” Mr. Sullivan said. “There are many firms in turmoil, many of which are owned by banks that are structurally in question.”