U.S. boutique money managers are finding it easier to garner substantial foreign assets without setting up an overseas satellite office or hiring an executive with boots on the ground.
Because institutional investors are becoming continually more comfortable in using independent performance databases, which in turn are improving their offerings through consolidation, the ability to win foreign mandates is no longer the insurmountable challenge it once was for smaller money managers.
“Clients are focused on getting the right manager and are willing to be flexible as to where that manager is located,” said Richard Dell, London-based principal and global head of Mercer LLC's equity boutique unit.
A number of U.S.-based small money managers have been successful in garnering assets from clients outside the U.S. without establishing overseas offices or hiring local sales professionals. Roughly half of Waltham, Mass.-based DDJ Capital Management LLC's $7 billion under management is from overseas investors. Stralem & Co. Inc., New York, manages $3.4 billion in assets, 16% of which is from non-U.S. institutions. And about 20% of Mount Kisco, N.Y.-based DSM Capital Partners LLC's $5 billion in AUM is from non-U.S. sources.
“Is it necessary to have an office overseas? Not necessarily. But they need to have a staff in tune with the cultural nuances of the pension plan,” Fernand Schoppig, president of FS Associates, a money manager consultant in West Orange, N.J., said in a telephone interview.
Mr. Schoppig added that, while winning non-U.S. clients can be done without a physical presence in the region, money managers need to be committed to raising capital overseas, which means they need to be focused on learning the language, customs and intricacies of the region.