Asset management firms still in process of determining how to best
capitalise on opportunities around the world
BOSTON, Oct. 2 /CNW/ -- According to a new report whose publication is
sponsored jointly by Citi and Legg Mason, fund managers have rapidly ventured
abroad in this decade in search of new clients and higher returns. The pace of
this expansion has accelerated lately as pension restrictions are lifted in
emerging economies and pension clients increasingly want all- inclusive global
mandates. Retail clients are more interested in funds with universal themes,
and new wealth generation is creating the opportunity for more retail clients
around the world to invest. The US still remains the industry's epicentre but
Europe and Asia are its new growth engines.
As half the assets have come to be held outside the domestic markets,
significant capability has been created in over 70 countries via a mix of new
starts, organic growth, M&As and local alliances. However, this opportunistic
mix has complicated the potential synergies in front, middle and back offices.
The report shows that globalisation has enhanced fund managers'
capabilities to do cross-border business. But its bottom line benefits are
restricted so far because of the fluidity in the ways in which businesses are
run on the ground. Furthermore, management bandwidth to run a global business
has been scarce, as has been the forward spend on it.
Not surprisingly, the majority of fund managers report that the operating
leverage they have in their home markets is hard to replicate abroad. While
their pragmatic rules of engagement have promoted creativity and enterprise,
the related individualism brings about its own challenges in terms of talent
retention and cost-effective growth.
Neeraj Sahai, global head of Citi Securities and Fund Services said, "But
there are clear winners. The report shows that around two in five managers
have succeeded by having a clear strategy on investment performance, client
needs and alliances with best of breed service providers in the back office."
Those firms who are finding success in pursuing global strategies have
paid a lot of attention to the nuts and bolts issues in the critical areas
like scalability of investment strategies, operational excellence and
incremental integration via alliances with the best-of-class distributors and
back-office service providers. To their credit, fund managers realise that
their efforts in this decade amount to a 'first stage' rocket: they will need
new rockets as they progress on their global trajectory.
"Like anything involving fundamental business evolution, the global
footprint comes at a price. Dysfunctional tensions are always a risk. Examples
of missed opportunities and mutual misunderstandings are to be expected. Some
of the mega-mergers involving banks and insurers had to be rolled back as
shareholders lost patience." said Amin Rajan, report's principal author and
CEO of CREATE-Research, a UK-based consultancy.
"Globalisation is clearly the future for our industry. As with any
effort to operate across multiple countries and cultures, we've learned by
doing, which we believe gives us valuable insight for the future. We are
pleased with the way our global business is progressing. This report
identifies some of the key factors and pitfalls which we believe will be
important to succeeding in the investment management business on a global
scale," added Peter L. Bain, Senior Executive Vice President of Legg Mason.
The report concludes with recommendations on how senior managers can
minimise the inherent tensions in their transnational aspirations by
implementing a strategic performance process that promotes integration,
innovation and accountability that are central to a vibrant global funds
(*)Globalisation of Funds: Challenges and Opportunities
Available free of charge from www.create-research.co.uk
CREATE is an independent research centre that focuses on emerging trends
in asset management and the strategic changes they require.
It has published a number of reports and articles on the industry based
on a research programme that started in the 1990s. Details are available on
Citi Markets & Banking is the most complete financial partner to
corporations, financial institutions, institutional investors and governments
in the world. As a global leader in banking, capital markets, and transaction
services, with a presence in many countries dating back more than 100 years,
Citi enables clients to achieve their strategic financial objectives by
providing them with cutting-edge ideas, best-in-class products and solutions,
and unparalleled access to capital and liquidity.
Citi, the leading global financial services company, has some 200 million
customer accounts and does business in more than 100 countries, providing
consumers, corporations, governments and institutions with a broad range of
financial products and services, including consumer banking and credit,
corporate and investment banking, securities brokerage, and wealth management.
Major brand names under the trademark red arc include: Citibank,
CitiFinancial, Primerica, Citi Smith Barney and Banamex. Additional
information may be found at www.citigroup.com or www.citi.com.
About Legg Mason
Legg Mason is a global asset management firm, with approximately $992
billion in assets under management as of June 30, 2007. The company provides
active asset management in many major investment centers throughout the world.
Legg Mason is headquartered in Baltimore, Maryland, and its common stock is
listed on the New York Stock Exchange (symbol: LM).
For further information:
For further information: Nina Das of Citi NY, +1-212-816-9267,
email@example.com, or Jeanette Volpi of Citi London, +44-0-207-986-2809,
firstname.lastname@example.org; or Mary Athridge of Legg Mason, +1-212-559-0104,
email@example.com; or Prof. Amin Rajan of CREATE-Research,
+44-0-1892-526-757, firstname.lastname@example.org Web Site: