Russia’s Aton favours private clients over pension money
Russian asset manager Aton Management is choosing private clients over institutional investors, hoping to get higher returns from managing private client assets.
The manager says many companies managing pension fund assets “have only lost money” this year.
According to reports by Russia’s news source Vedomosti, Aton Management is shifting its focus to private clients with assets between $100,000 and $3m-$5m.
This year, two thirds of Russia’s fund managers have experienced a drop in earnings. A review of 48 Russian asset managers by Russia’s financial news source Kommersant found their cumulative earnings fell 10% this year to June compared to the same period last year.
Experts say the losses were caused by a decline in mutual fund assets, which is the main source of regular cashflow for the industry.
In comparison pension funds, which have been investing more money with Russian management houses this year compared to last, do not pay regular fees on investment.
Apart from that, they only pay performance-based fees. But they allocate to less risky assets in comparison to wealthy individuals, so the returns on their investments are much lower.
As a result, the earnings from pension holdings are also much lower than those generated from mutual fund investments.
This thinking has been the driver of Aton’s decision to turn away pension assets and focus on private money.
But, far from boosting the business, this shift in focus has so far caused losses. Private clients have proven reluctant to entrust their funds to Aton.
Analysts from Russia’s National Rating Agency say this has undermined the reliability of Aton Management as a company.
In the second quarter, Aton Management is reported to have lost over a tenth of its assets under management.
To date, the firm manages around RUB2.5bn in private client money, most of which comes from the “Small business Moscow” investment fund backed by the government.
For now, the bulk of Aton’s income comes from its brokerage and consultancy services.