Perruccio plans three-pronged European pitch

Roxane McMeeken talks to Pioneer’s new chief executive, Matteo Perruccio, about how he expects to meet some ambitious targets for product sales. Over a frugal, fruit-based working breakfast on the roof of the Bayerischer Hof Hotel in Munich, the new chief executive of Pioneer Investment Management talks about fashioning his firm so that it is “more in the face of the client”. Despite the baldly aggressive tone of this statement, Matteo Perruccio actually has a complex and even subtle strategy for selling and distributing investment products in the current climate of uncertainty. It ranges from the recent acquisition of the hedge fund firm Momentum to using the adviser network of Pioneer’s parent company, Italian banking giant Unicredito. Of the E100bn managed by Pioneer, 75 per cent comes from Italy, 15 per cent from the rest of Europe and 10 per cent comes from the US. The management of the lion’s share – that is, the non-US assets – is Mr Perruccio’s responsibility. His new role has also seen him take control of all product distribution outside the US and Eastern Europe. Mr Perruccio will not be drawn on specific targets, but admits, “two years ago we wanted to double our sales within three years and we were on our way. Now, we are still growing, but we have had to lower our expectations in this market.” He will only reveal that in the alternatives arena, he hopes to make Pioneer “number one of two in Europe within five years”. Nonetheless, over his freshly squeezed orange juice, the energetic Mr Perruccio claims to have devised the ultimate fund management business plan. The three-pronged strategy boils down to:

• a flexible approach to distribution
• an approach to product design claimed to be “more intelligent and thoughtful” than that of many other providers
• an emphasis on quality service. Ambitious mission statement In Europe, Mr Perruccio plans to remain open to any means of distribution presenting themselves. “We intend to be a major market force in all the market segments where we choose to compete, whether that is in the form of institutional, retail or segregated arrangements, through structured products or alternative investments”. As an ambitious mission statement, this takes some beating. But Pioneer does boast an impressive history. In Italy, where the firm launched its first fund in 1967, Pioneer runs E75bn. The bulk of distribution is done through a proprietary model rather than through third parties, in the form of Unicredito’s financial adviser network. For pan-European cross-border sales, Pioneer boasts E32bn in its Luxembourg funds range, which puts it ahead of Fidelity. In Germany, where the firm has had a presence for 30 years, it has ingrained itself in the independent financial adviser market and it also distributes products through banks. Mr Perruccio claims Pioneer is one of the best known financial brands in the Teutonic market. He is currently “beefing up” the German team in order to start selling funds – particularly international funds – to the institutional market. In Spain, where Pioneer recently opened an office, the firm has won its first sub-advisory mandate. The country’s largest fund manager, Santander Central Hispano Gestion Activos, hired Pioneer to run core US equities for its Spanish mutual funds. Mr Perruccio says this demonstrates the new way of working. “Santander has a bank branch network and it has fund managers. They were doing a lot of things well, but US equities was not one of them.” As a trade-off, Santander will help Pioneer with one of its own specialities – developing a range of Latin American equity funds. Plans are being made to launch joint products in this area. Spain’s insurance companies, banks, private banks and supermarket banking services will also be key distribution channels. A Swiss office, opened just three months ago, will be tailored to the country’s market through orientation towards family office business and alternative investments. As a new player on the Swiss field Pioneer faces “tough competition” but Mr Perruccio believes the key to success lies in having a “great product range”. The same belief underpins Mr Perruccio’s strategy for the UK, which is the next market on his hitlist. The right products Almost anything is possible in fund management, provided you have the right products, believes Mr Perruccio. While Pioneer offers a broad range of funds covering equities and fixed income, it is the alternative and guaranteed investments which the company is currently pushing and which Mr Perruccio believes are most in demand in the current economic climate. Momentum, Pioneer’s newly acquired funds of hedge funds subsidiary, will be instrumental in developing this capability in managing alternative assets. Mr Perruccio reveals that he is planning to roll out a number of guaranteed versions of Momentum’s funds as well as a range of single strategy funds run by Momentum, which will have low volatility. One new fund of hedge funds, All Weather, is to be launched at the beginning of summer. The acquisition of Momentum is also the lynchpin of Pioneer’s push into the UK. Mr Perruccio explains that Momentum’s established UK distribution channels will now be used to sell Pioneer’s products as well. Further alternative products from Pioneer’s own business are also planned for this year, including long-short and absolute return strategies. There will also be a number of structured products coming out based on both long only and less traditional funds. These will be backed by the investment banking arm of Merrill Lynch. “What’s important,” says Mr Perruccio, “is that we offer investments with a purpose. There are a lot of products out there that cost more, but provide little extra value. Many structured products are becoming commodities. Customers pay high prices for them when they would have made money in the investment even without the structuring. We want to be more innovative and offer real upside and capital preservation.” Service as a differentiator However, Mr Perruccio stresses that success is not just about products. He is aware that Pioneer is a late entrant into Europe’s markets, bar Italy and Germany. But rather than seeing this as a problem, he is making it into a selling point. “We identified that there were lots of providers, but few good ones. We took advantage of our relatively late entry to find the best people and focus on service instead of just product.” In this way he hopes Pioneer will differentiate itself. According to Mr Perruccio, this higher standard of service is seen in transparency of information, strong risk management techniques and “listening to what distributors want”. He adds, “everyone talks about service, but the reality is that few of us are very good at it.”

The art of fund management Matteo Perruccio is a true international. Born of Sicilian parents, he grew up in the United States and gained his BA degree from the University of Notre Dame. He also holds an MA from another American university, the School of International Affairs. He has been at Pioneer, based in the Milan office, for two years. Before that, he ran third party distribution of asset management products in Europe, the Middle East and Asia for American Express. He has also worked at San Paolo IMI in both New York and Turin. Mr Perruccio’s hobbies include collecting antique cars and art. His philosophy can be summed up by the story of a man who once stood admiring Pablo Picasso’s ‘Bicycle Seat’. The great artist was quietly standing behind him when he said: “I could do that”. Picasso interjected, “Yes, but you didn’t”.