Which geographical markets are you initially targeting, and what is broad longer term plan internationally ex-Ireland?
To date, we have grown our international client base from 20% in 2014 to 35% of AUM today and expanded into new markets including Canada and the US.
ILIM is specifically targeting three core regions; Canada, US and Europe (currently Netherlands, Luxembourg, Germany and Italy).
Our capabilities and strategic focus on distribution partners provides the opportunity to extend to any region globally. Longer term we would aim to expand this geographic reach across Europe and within Canada and the US. As with any asset manager we are looking at developments in China and Asia and keep these regions under consideration.
What types of products are you putting together for these markets?
Globally we see our capabilities being used to support multi asset solutions for the retail and DC markets. We have a range of solutions which are always evolving which include;
For passive strategies, this is across traditional market cap weighted indices but increasingly factor and on an ESG basis.
For quantitative strategies, we have alpha portfolios which seek to generate stable and consistent alpha over time with low relative risk to benchmark.
Our multi factor solution set extends to global and regional strategies and uses a multi factor strategy to deliver robust returns over a live 15-year track record.
Our risk management strategies focus on managing the drawdown experience of clients while delivering equity like returns:
- Low Volatility Equity Strategies (Global and Emerging Market) –strategies which seek to use a multi factor strategy and sector model to deliver equity like returns with lower volatility and lower drawdown than the market;
- Equity Risk Management Strategies (Global) – multi factor strategies which seek to manage the equity market risk by adjusting a portfolios exposure to the equity market in order to deliver equity like returns with lower drawdown than the market
- Dynamic FX Hedging strategies – multi factor strategies which seek to offer a dynamic approach to hedging strategies to improve the risk and return characteristics of a hedging programme;
How important are passive investments for the success of your approach?
One of our core competencies is passive management and passive investments make up over €40bn of our AUM and has seen significant growth in recent years driven from a range of both domestic and international clients.
Globally, we see a structural change emerging in the asset management industry. The previous two tier approach of active and passive investment styles which were mutually exclusive has really evolved to a three tier model of pure beta (passive Investments), factor style return premia (which can be reflected through both passive or active strategies) and pure alpha strategies (active managers, hedge funds and alternative investments).
We see the continued pressure on costs and regulatory change driving distribution partners to review their solution sets. Increasingly, solution designers want a differentiated customer value proposition which addresses the core needs both the clients and the business have.
Retail clients are increasingly seeking the need for greater confidence in their financial futures driven by achieving certain outcomes not necessarily consistent with peer group performance rankings, and the need for confidence that they are paying for benefits received.
Solutions designers are also responding to competitive downwards pressures on pricing models by moving away from the traditional active management style and using a greater use of lower costs Indexation and quant strategies within their solutions.
In this regard, we see indexation as providing efficient access to market returns and used increasingly as a building block within solutions complimented by other quantitative or active solutions.
Our ultimate goal is to enable our partners to use our indexation capabilities to achieve their desired outcomes.
What initiatives do you have planned for the rest of the year?
We are working on a number of key initiatives which include working with our domestic pension schemes clients to consider the implications of IORPS II (the directive on Institutions for Occupational Retirement Provision) specifically with reference to ESG.
We are also building out our capabilities to support ETF distribution partners and expanding our passive capabilities in the fixed income space to provide access to US and global aggregate strategies as well as passive high yield.
Finally, our quant team is currently concluding research on the development of liquid alternative strategies and we are working heavily on reviewing the implications and preparing or MiFID II.
