Allfunds: Think globally, act locally
Allfunds Bank has maintained its position as Europe’s claimed largest mutual fund platform for the last two years through an approach defined as ‘global reach with a local service delivery’.
Adopting local distribution to match local needs with increasingly global products has been key for Allfunds’ organic growth from its traditional core markets of Italy and Spain into Switzerland, Luxembourg and the UK.
In 2015, Allfunds’ assets under administration (AUA) gained 46% to €215bn – well ahead of its nearest rival, UBS Fondcentre, which grew 17.6% to €169.4bn, according to Platforum’s latest findings on European fund distribution.
This year the fund platform remains on track for growth, says Jaime Pérez-Maura (pictured), Allfunds’ Business Development & Sales Planning director; despite uncertainty after the Brexit vote and rising political risk in Europe, the fund platform still sees “huge growth opportunities” in the region.
The opening of an office in Switzerland three years ago allowed Allfunds to penetrate northern European countries, where the firm now has solid activity – in the fourth quarter of 2015, assets in Central Europe and the Nordics more than doubled over the same time the previous year, according to Platforum.
“We are growing our central European hub based in Zurich, which is guiding us to reach northern Europe, the Swiss private banking business and also some clients in Germany,” Pérez-Maura says.
BREXIT: HURDLE, BUT NO BARRIER
In the UK, where Allfunds has been present since 2005, it took a long time to establish the fund platform’s model, but the business “is now thriving with a very strong pipeline,”
says Allfunds’ CEO Juan Alcaraz.
Although the UK market is seen by Pérez-Maura as “quite competitive” and “one of the most sophisticated”, the B2B fund platform has managed to establish growth.
The outcome of the recent EU referendum in the UK – with 52% of votes in favour of leaving the bloc – could be seen as an additional hurdle, though.
As with the rest of the industry, Allfunds is in wait-andsee mode, but Pérez-Maura does not foresee any severe impact, and thinks regulation of funds and distribution is likely to be similar in the UK after Brexit is completed.
“We are still waiting to really see the impact on the industry. For us nothing is changing, in the sense that we do have EU headquarters and we are EU centric, but our activities and setup in the UK won’t change by the fact that the UK will no longer be part of the EU,” Pérez-Maura says.
“We are not weakening our position in the UK, as we are going to keep the local exposure and the local buyers that we have in the country. The UK market will tell us if this local flavour has to increase, but we already agreed we needed to be local. We still believe the products we offer – combining local and international products – will be as attractive as they are today,” he says.
Regardless of Brexit, Allfunds has confidence in Europe and acknowledges the need of evaluating alternatives to grow in the markets where it is underexposed – Germany and France.
“We are investing in order to grow business in Europe. But also we are diversifying in areas in Latin America and the Middle East,” Pérez-Maura says.
The funds supermarket has shown clear ambitions to grow globally, with a strong presence already in Latin America, where, since 2008, it has had a local presence in Chile. In 2015 it opened another office in Colombia.
According to media reports, Allfunds plans to open a third in Brazil.
The B2B platform also established an office in Dubai back in 2011. The firm said at the time it had long-term plans for expansion in the Middle East.
Three years later, Ynuns Selant was appointed Middle East & Africa regional manager to replace David Pérez de Albeniz, who moved from Dubai to Singapore last year and is leading the Asian project to establish Allfunds’ presence in the local market.
Since its foundation in 2000, Allfunds has expanded from its core European markets, now offering close to 46,000 funds from 493 fund managers, and claiming nearly 500 institutional clients in 33 countries.
“We are no longer a local player, we are a diversified global player,” Pérez-Maura says.
This allows stability from the business perspective and “a better position” against competitors, as other fund platforms tend to be specialised in just a particular market or client, he suggests.
“We can deliver services that no one can really offer if they don’t have the capability to invest and assume costs. With the size that we have we give a lot of scalability and leverage in our platform from a cost perspective,” Pérez-Maura says.
The fund platform is jointly owned by the Santander and Intesa San Paolo banking groups, but it distributes mainly third party funds, as investment vehicles from both owners make up less than €4bn of the total Allfunds’ AUA.
Pérez-Maura highlights that Allfunds does not distribute its own products, which avoids competition with fund providers.
“Our clients see us as a trusted partner to grow their business by distributing funds. We are proud of our growth, but also by the fact that we are very well regarded by fund managers,” he says.
Platforum’s latest findings on European fund distribution provide an element of backing to this view. The research firm surveyed 46 asset managers, of which 55% suggested that Allfunds had the best “distribution potential” compared with 35% and 20% for its nearest two rival platforms.
The survey also found that half the fund managers believed Allfunds represented “value for money” compared to 20% and 15% for its nearest two rivals.
Asset managers also value Allfunds’ transparent model, Pérez-Maura says.
Some funds managers might have objections to fund platforms when it comes to controlling the commercial reach of the funds, but Allfunds claims it can accommodate managers’ requirements in their setup, allowing efficiency from a transparency perspective.
Thanks to this approach, the fund platform is not concerned about the challenges of implementing Mifid II.
“We had a lot of experience with Mifid I in Italy for example, and we believe that we are going to be winners in the implementation of Mifid II because the outsourcing will become more of an issue and we believe we are in the best possible position,” Pérez-Maura says.
“We are providing not only the operational flow but also the information flow, which is becoming more important for the implementation of Mifid II,” he says.
Allfunds bases its model on ‘open architecture’, allowing investors and advisers to buy funds from a wide range of providers in one place. This focus is complemented by independent research of the mutual funds it has on its platform.
Regarding the provision of management information, 35% of managers polled by Platforum suggested it was best for providing good information, which compares with 30% and 15% for its two nearest rivals.