Three is the magic number for Fideuram

A search for higher alpha and superior investment management quality, combined with a desire to offer innovative, customised solutions to its sophisticated client base drove the decision to sub-advise at Fideuram Investimenti, explains Giovanni Folgori, head of the Italian firm’s multi-manager and affluent customer unit.

The company, which manages 50bn in assets, and distributes its products through the Fideuram bank’s extensive promotori network of private bankers, currently employs two managers on a sub-advisory basis and is looking to add a third one in the near future.

For the past two years, Goldman Sachs Asset Management (GSAM) has been running a global tactical asset allocation (GTAA) product for Fideuram. This falls within the Italian ‘flexible fund’ category, as defined by the asset managers’ trade body Assogestioni, where the manager has the freedom to move the equity allocation from 0 to 100 per cent. The product, which boasts 1bn under management, is basically a hedge fund wrapped in a mutual fund, searching for investment opportunities through both a strategic and a tactical allocation. It is the only example of its type in Europe, claims Mr Folgori.

GLG Partners, one of London’s largest hedge funds managers, will start managing a similar, absolute return product for the Italian fund house in October. The investment mandate is to run a global stock-picking fund, which can leverage up to 200 per cent.

“This is really a case where we make the most of Ucits III potential,” says Mr Folgori. The firm also employs Risk Management Solutions (RMS) to manage a more traditional hedge fund.

“Today we are more focused on alpha, on total return; our three mandates are all absolute return,” says Mr Folgori, explaining that the three asset classes the firm sub-advised in 2002, emerging market equities, high yield and emerging market bonds, managed by First Colonial, Mackay Shields and MFS respectively, were brought back in-house after three years. “This is just a normal widespread market phenomenon, the benchmark products have become less and less interesting. We have reduced the sub-advisory mandates with less added value, hiring internal managers, but we have increased those with higher alpha,” adds Mr Folgori.

A dedicated and rapidly growing multi-manager team is in charge of the sub-advisers selection process. The team is also responsible for the selection of mutual funds, which feed the firm’s successful multi-management product. The business started a year and a half ago and has already gathered 3bn of assets under management. All current inflows end up in the multi-management strategy at the expense of in-house managed products, says Mr Folgori.

The new European directive, MiFID, will further drive open architecture and benefit high quality multi-management operators as distributors will have to offer more value added and wrapping, thinks Mr Folgori. Asset managers will also have to become more independent and separated from the banks, he believes.

ET