Competition will shrink funds universe, says Hillenbrand

Added 6th May 2016

Rising competition and a low-growth, low-return environment will shrink the number of funds offered by asset managers in coming years, predicts Henderson’s Simon Hillenbrand.

Competition will shrink funds universe, says Hillenbrand

Referring to the growing trend for consolidation among wealth managers, Henderson Global Investors director of UK retail said the concentration of decision makers within the intermediary space had exacerbated competitive pressures.

Hillenbrand said: “For a lot of businesses, carrying the cost of running too many funds will become an issue. It is not a straightforward question of boutiques versus big players, either, it is going to be about how you are thinking about your business now.

“If you look at the performance tables, I would think there are a number of funds that will struggle to be around in five years.”

According to Hillenbrand, while the firm continually evaluates its product range, it has no plans to shut any funds.

Rather, he said, the focus is on its ongoing growth and globalisation strategy, the first flowers of which are starting to bloom.

“We have gone through a number of different iterations as Henderson, but it is exciting now as a lot of the stuff we have been investing in is starting to land.”

A good example of this is the firm’s emerging markets equity offering headed by Glen Finegan, who joined from First State Stewart in January last year.

“Glen benefits from having funds with a variety of structures, including Sicavs and 40 Act funds in the US, and we are also looking at expanding that into Asia and Australia, for example,” he said.

“This is the type of globalisation we are talking about; we are putting a manager in play in all of the regions in which we operate.”

He added the UK had a part to play because it would not make sense to invest in new teams and capabilities and not launch them into the country.

“It is about building products we can scale and offer across the world. That is perhaps the biggest difference in the past four or five years,” he said.

While there are currently no new products on Henderson’s slate, Hillenbrand said there are a number of new ideas, such as Finegan’s emerging markets equities offering, that are currently being incubated and will continue to be a focus for the firm.

He added Henderson is also making good progress in its core areas of property, Europe, fixed income and absolute return.

One area where it has stumbled recently is in the multi-asset space after it was announced Bill McQuaker was leaving for Fidelity (see page 10).

But, here too, Hillenbrand remains positive. “We have spent the past four or five years thinking of this desk as a team and that has been reassuring to clients,” he said, adding that there were currently no plans to replace McQuaker.

But, he said, certainly for Henderson, multi-asset remains one of the company’s five pillars of investment

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Geoff Candy

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Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.

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