You launched your first four funds in January. What distinguishes them from what is currently in the market?
We will still be risk-profiled and there will still be structure from fund to fund, even if 60% or 70% of it is passive and 20% is active. The other 10-20% is direct, whether that is bonds or risk premia
On fees, the international world hasn’t gone through the same compression issues we are seeing in the UK, and that is yet to happen. I think it is all happening much quicker than people thought it would.
We are approaching some very significant advisers in the international world and explaining that this is an institutional approach with institutional fees, and that we are going to run it for 67 basis points.
This is a product that looks like everything you’ve done before, as we have tried to independently focus on the efficiencies.
We are not suggesting everyone has been wrong for years and that we shouldn’t be doing risk-profiling.
We will reduce the moving parts slightly and focus more on the strategic asset allocation, therefore giving us a higher probability of success.
If we are right, the end goal is that we beat the average, and when we are wrong, which, of course, we will be, the efficiencies we save mean we will be the average.
Lord Sugar said: “Where there’s mystery, there’s margin.” And this whole industry is about confusing the hell out of people but there doesn’t appear to me to be any premia for complexity.
Who would you say is your nearest competitor in the retail space?
Architas has got quite close with its active/passive blend, even though they don’t sell much on the international market.
The Norwegian and Australian pension schemes are all doing this already. They buy risk premia and direct holdings. I just want to unitise institutional processes and pass down as many of those cost efficiencies to the end client as possible.
Are you paying commission to IFAs in those markets where you can?
Yes, we will have commission-paying share classes but we are not making a product cheaper so we can embed a bigger commission. Our commission will be the industry standard in the markets where we can charge them.
For the offshore market, we are trying to squeeze down every last bit of fee we can. We will cap the look-through TERs at 1.2%. We will be completely transparent on what our fees are and there will be 38 share classes from day one.
Which markets are you targeting initially and what is the broader, long-term plan, internationally and ex UK?
For the international market, we are talking to all the big international brokers and life companies. Passing this message of simplicity and efficiencies into those markets is something advisers are really embracing.
Geographically, our target markets include Europe, the Middle East and Asia, and I am about to head off on a business trip visiting 44 countries in eight weeks.
I recently saw a life company in the Middle East, where there is a lot of regulatory change happening, and the guy said to me: “I am sure you’re going to show me a sexy presentation but we’ve got a big problem at the moment with this sort of thing.” However, he allowed me 20 minutes and afterwards told me it was exactly what he needed.
We want to make sure we preserve and grow capital in a cost-efficient but common-sense fashion.
People are talking about many future redundancies in the asset management business, which suggests people are admitting the asset management world can cope without all these people.
If you are a big, listed asset manager then you’ve probably got double the headache than if you are unlisted, because that whole incumbent innovation dilemma is about serving existing shareholders, and a listed company has to service those shareholders more than any other interested party.
