Do you have that distribution channel in most of the markets you operate in?
Where they exist, yes, but then the dynamics of what you define as financial advisers varies across countries. The way they operate also varies. So in some of the countries they might call themselves independent asset managers. Instead of using a platform, they will hold their client money with a large bank, for example in Switzerland.
Have you signed any significant deals in the past year?
Since we have been doing business for all these years, we already have all the clients signed up. We probably have more than 2,000 distribution agreements. So, for us, growth is not signing up new clients. It is broadening our relationship with those existing clients.
At a company and platform level, in Europe we have all the clients that we want at that moment.
If you were to take a list of the big insurance companies and banks, there will be a high correlation between those names and our big clients. We operate through the larger financial intermediaries in the countries and we know who they all are.
Did you enter any new markets last year?
Geographically, no. Over the past year, the only area where we have made significant investments has been strengthening our presence in France with a team dedicated to the financial advisers. We made two hires.
We think we have competitive advantages in working with this type of distribution channel, especially because of the work we have developed with our market insights programme.
We think we can help advisers to do a better job with their own clients, aside from providing good products. Adding value for these advisers makes us a better partner than many others in working in these complex times and complex financial markets.
In France, financial advisers have a significant market share and in reality, in a market which is very closed to non-French players, the adviser are more open to third-party products including cross-border products. The banks, by contrast, tend to be very closed and French-centric.
Since we have been doing business for all these years, we already have all the clients signed up. We probably have more than 2,000 distribution agreements. So, for us, growth is not signing up new clients. It is broadening our relationship with those existing clients.
At a company and platform level, in Europe we have all the clients that we want at that moment.
If you were to take a list of the big insurance companies and banks, there will be a high correlation between those names and our big clients. We operate through the larger financial intermediaries in the countries and we know who they all are.
What are your latest product launches?
We try to be economical with new launches as we have so many funds. The two main launches are our Ucits authorised US Opportunistic Long-Short Equity Fund, which is long/short as in the hedge fund definition of the word, and our Diversified Alternative Strategies Fund.
The long short fund is not the first, but we have high expectations for the fund. It has been in existence in the US for about a year and it is doing really well. It has been road tested there, and this would be managed in exactly the same way. We have a very strong manager, Rick Singer, who is a high-conviction stockpicker but he also utilises the very broad resource capability we have.
The other new fund – our Diversified Alternative Strategies Fund, also Ucits authorised – is a fund of hedge fund strategies, not of hedge funds.
We put together a portfolio of what we call sleeves, with the result that we have complete transparency and control over those underlying portfolios. Some people call it a fund of managed accounts, which is what it is. We have complete visibility on positions, which improves the way in which we can, for example, risk manage the product overall.
Where does JP Morgan sit in the rankings of Sicav providers?
We have had a presence in Ucits-approved Luxembourg-domiciled Sicavs since 1988. Global assets under management in Sicavs is $134bn, including those sold in Latin America and Asia. Counting only Sicavs sold in Europe, assets under management are closer to $68bn and we rank as the second largest provider industry-wide, as of September 2015.
Long-term net inflows into Luxembourg Sicavs (excluding money market funds) for the 12 months to 30 June 2015 was $9.7bn. We want to keep growing our business. We do not have any objectives of absolute growth, but we want to preserve our market share.
At the same time we want to be the best. We do not want to be the biggest. As long as we can provide quality service to our clients, that is more important to us rather than growth for growth’s sake.
We hope that the fund industry will keep growing because if it grows, we will grow. For that, we need a level playing field. We are not asking for advantages for mutual funds but at least to avoid any disadvantages, which sometimes still do exist.
We are asking for a stable regulatory framework. So tell us what we have to do and we will do it, but then let us not keep changing the rules all the time, and we can preserve the openness and scalability of the Ucits market against any threat of Balkanisation. We cannot afford to go back to 27 European markets.
