GSAM exploits Ucits to get a foothold in retail market

Asset managers and the distributors of their products across Europe have shown a very mixed reaction indeed to the Ucits III directive, and the new powers this gives them in terms of offering a much broader palate of investment instruments.

Italian groups have been among the most active. Market leader Nextra, whose majority ownership recently passed from Banca Intesa to Credit Agricicole has concentrated on replacing many of its existing concepts with a new 20-compartment asset allocation fund, using derivatives permitted under the directive.

Few Italian players have been able to ignore the change, as it has provided them with a marketing story, allowing them to seriously promote mutual funds in a country dominated by structured products sold by investment banks since the new millennium.

But Europe-wide, there has not been so much enthusiasm. The one key exception among the cross-border players is Goldman Sachs Asset Management, which appears to be basing much of its new business effort on exploiting the legislation, both in terms of its institutional effort and its desire to leave a deeper footprint in the retail distribution and sub-advisory sectors.

“For GSAM, this is a once in 20-year event,” said the US group’s CEO of European operations, Suzanne Donohoe. “We will be doing what we are already doing institutionally, but applying it to the retail market.”

GSAM expects to launch up to 35 new funds during the first part of 2006, with the greatest initial focus on currency and commodity asset classes. These both have a 10-year plus track record with Goldman’s institutional clients, but will now be presented for cross-border distribution in GSAM’s Luxembourg range.

GSAM hopes the broadening of products will allow it to join ‘preferred provider’ lists of global distributors such as Deutsche Bank and UBS.

The advantage of marketing funds registered under Ucits III has also been recognised by some members of GSAM’s target market. “This makes things easier from a distribution point of view, as we can have the same topics and marketing material right across Europe,” said Dominic Blum, responsible for investment products for private and business clients across Deutsche’s branch network.

However, Mr Blum warned that many institutional players have much work to do in terms of adapting marketing materials for a retail audience. “Some of our partners are not retail asset managers, they are institutionally focussed. It is vital for product material to be readable from a private investors’ point of view, so that we don’t have to translate it for them.”

YB

Donohoe: once in 20-years event