DJE plans to expand German sub-advisory model
Dr. Jens Ehrhardt Group (DJE), one of the largest and independent investment managers in Germany, is looking to replicate the successful sub-advisory business model that it has implemented in continental Europe in the UK. The company, with over ?6bn of assets under management, gets the majority of its business from managing segregated mandates for other financial institutions, including Deutsche Bank’s asset management arm DWS and Frankfurt Trust in Germany or private bank UEB in Switzerland. The company is also currently in the process of seeking Financial Services Authority (FSA) approval for a number of open funds to be offered in the UK via selected IFAs. The funds on which the German fund manager is relying for its expansion in the UK are those which leverage on the company’s investment expertise in the German market, including UBAM German equity fund, DJE Absolut fund, a European equity fund with a bias in German equities, and DJE Real Estate. Dr Jens Ehrhardt, who founded the business 30 years ago, has a positive outlook on Germany. The country is experiencing particularly good conditions, reforms happen at faster pace, inflation rate is decreasing, competitiveness of exports is rapidly growing, he said. Jörg Brock, head of investment strategy and product development at Commerzbank, states that smaller firms might have an advantage on larger firms because their product range is so concentrated. “From this point of view, I would say that there is a chance for smaller companies to deliver better performance.” Retail distribution channels such as Commerzbank are not likely to establish partnership with small fund houses, because retail investors generally do not demand niche asset classes. If they do, these small managers are not able to handle the big volume generated, explained Mr Brock. But there will be a growing trend of awarding mandates in niche asset classes in Germany, Europe and in the US by investment managers who want to focus on their core competency.
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