The tide is turning in the U.S.-to-U.K. flow of money managers: A slew of U.K. and European money managers are introducing, and in some cases expanding, their presence in the U.S.
“The U.S. is a large market, which managers in Europe find attractive,” said Michael Kinney, senior researcher in Mercer's equity research boutique, based in London. “However, clients that were once happy to work with managers based in Europe and the U.K. have become increasingly sophisticated. European-based managers need to be able to respond to this sophistication, and having an office in the U.S. for client services reasons makes sense.”
From a business perspective, Mr. Kinney said managers want to diversify their client base outside of Europe. The same goes for strategies. “You can manage a traditional government bond portfolio from anywhere in the world, but if you are looking to make money in the future, you need to widen products. And if you are looking at credit-oriented or absolute-return products, the largest opportunity set from which to build these is the U.S. — so having an office on the ground makes sense,” he said.
Insight Investment Management (Global) Ltd., Legal & General Investment Management, Berenberg and Aberdeen Asset Management are just four of the European managers looking to introduce their products or extend their business in the world's largest pension market.
Some, such as Insight, have the benefit of leveraging a parent's presence in the U.S. Insight, with £273.3 billion ($454.5 billion) under management, is owned by BNY Mellon Asset Management.
“The catalyst for the U.S. expansion was the integration of (sister company) Pareto, a currency overlay boutique, which was integrated into Insight Investment a year ago,” said Philip Anker, global head of distribution at Insight Investment in London — where about 99% of its staff is based.
The manager, which is known in the U.K. for its liability-driven investment prowess as well as fixed-income capabilities, has not made any concerted effort to market itself to the U.S. “Our existing clients were one of the (other) main drivers behind setting up in the U.S.; we already manage money for large U.S. corporates and their subsidiaries in the U.K. and Europe,” said Mr. Anker.
The firm also has U.K. and European clients looking to leverage their experience with U.S. subsidiaries, while global consultants have expressed interest in offering Insight's expertise to clients. “Those three strands are quite a powerful calling card,” he said.