The duo soon to be at the helm of global money manager Royal Bank of Canada Global Asset Management Inc. will draw further on past acquisitions as they look to increase the firm's footprint internationally — and in the U.S. in particular.
On May 1, Damon Williams and Alex Khein will step up to the co-CEO roles at the C$371 billion ($296.8 billion) Toronto-based money manager, succeeding John Montalbano, the current CEO.
Vancouver-based Mr. Williams is currently head of institutional business at RBC GAM, leading the global business for the firm except its operations at fixed-income firm BlueBay Asset Management LLP, which it acquired in 2010. He is also president of Phillips, Hager & North Investment Management, which RBC acquired in 2008.
Mr Khein is partner and CEO at London-based BlueBay, a role he took on Jan. 1, 2014.
“There is not going to be a radical shift in the direction of the firm — there will be continuity,” said Mr. Williams in a joint interview with Mr. Montalbano, at the firm's London office overlooking the River Thames. “Day to day, (Mr. Khein) will continue to run BlueBay. I will have everything outside BlueBay. And then we have joint responsibility for making sure the whole business succeeds.”
BlueBay, which has $62.9 billion of assets under management, will continue to retain its investment autonomy and operational independence, “but areas do work together,” said Mr. Williams. “As an overall firm and at this point in our evolution, as co-CEOs we will work to bring together the (various) parts of the firm. We are making a statement internally and externally that RBC GAM and BlueBay will be closely aligned.”
The C$1.56 billion BlueBay acquisition in 2010 added fixed-income capabilities, including private credit and debt strategies, to RBC GAM's investment toolkit. The new management team will use these skills in their bid to push further into the U.S. market.
“We have a leading position in Canada, both retail and institutional. Outside of Canada we have invested in our U.S. business — with distribution teams, investment teams across RBC GAM with (strategies) relevant to U.S. clients. We have quite ambitious objectives to grow our business in the U.S.,” said Mr. Williams. Institutional business accounts for 53% of total AUM, of which 42% is in Canada. The U.S. follows with 26.5% of AUM, Europe ex-U.K. accounts for 19.3%, and the U.K. for 6.9%. Asia and Japan account for 4.1% of institutional assets under management, and the remainder comes from other markets.
Having identified a growing trend on extracting value from active management, for example, the firm has brought relevant capabilities to the U.S. market. “We are trying to add where, over the long run, we feel we can add value to portfolios,” Mr. Williams said. Strategies offered in the U.S. to that end include small- and midcap U.S. equities and short-term U.S. fixed income.
Liability-driven investing is another big opportunity for growth. “One of our competitive advantages is we are one of the largest LDI providers in Canada,” said Mr. Montalbano. “For many (retirement) plans we work on in Canada, they are part of a bigger U.S. parent firm. We are talking to them about portable alpha and LDI.” And the money manager can draw on other parts of the RBC business, including the insurance and capital markets businesses, which feed into the derisking trend, said Mr. Williams.