A growing european presence

With responsibility for $112bn (e86bn) of Alliance’s $480bn total in assets under management, the non-US arm of ACM is a force to be reckoned with. Assets gathered from Europe are not disclosed, but received a shot in the arm when ACM International opened marketing offices in Germany, Spain and Switzerland in 2000. A Swedish office has opened in 2004.It seems that even non-US investors are responding to the style-specific funds so beloved of their American counterparts.Although historically best known as growth investors, Alliance now has more money in value strategies ($165bn) compared to growth ($126bn). It also has substantial fixed income assets ($161bn).The core European value product has been managed by the Bernstein division in London, since the acquisition of Sanford Bernstein five years ago. This focuses on identifying under-priced stocks. Bernstein is used as the brand in the value space and Alliance Capital for distributors requiring growth strategies, identifying companies delivering rapidly growing revenues or earnings.Alliance has had an office in London since 1978, but never focused on retail-style business until two decades later. It became known during the 1980s for its technology and healthcare products, marketed to institutional clients. A Luxembourg range of cross-border funds for retail distribution was launched in 1991/92, although its healthcare fund had been registered there almost a decade earlier.“In the early 1990s, Alliance was focused on offshore private banking networks, which allowed third-party funds,” says Mr Luning. “When I joined in 1993, I thought we were supposed to be in the savings business, not offshore private banking. In my mind, I had to do business with banks’ domestic customers. But it took me a while to convince the people in New York that we needed to register products, so they could be owned by people in Spain, Germany and Italy in a tax-efficient way.”The UK is another story, however, and there is still no evidence of style-led investing making any inroads. Also because ACM’s Luxembourg-registered FCP funds are not tax advantageous in the UK, Mr Luning has failed to make any dent in the independent financial adviser (IFA) market.“The UK retail market is very different from the Continent,” he says. “In London, a pragmatic manager has the ability to switch from growth to value, but we can’t manage money that way. Even our blend products, which offer a combination, are not pragmatic. We don’t switch the portfolio one way or the other. We have a very good value service, but it is too style-specific for UK retail tastes.”