Exporting local champions globally
Allianz Global Investors (Allianz GI) has come a long way. On the 125th anniversary of parent Allianz and three years afer the separation from Pimco,Tobias Pross (pictured) head of Distribution Europe and member of the European Executive Committee at Allianz GI discusses the challenges ahead.
As a subsidiary of the originally German and now global insurance giant Allianz SE, Allianz GI can pride itself in benefiting from a mstrong parent company to boost its distribution across the world. Indeed, this year marks the 125th anniversary of Allianz SE and the group claims to have had fewer CEO’s than the Catholic Church has had popes over that time.
While the asset management firm traces its roots to the first German investment funds launched in the 1950s, key milestones in recent history were the acquisition of US asset manager Pimco in 2000 and the acquisition of Dresdner Bank one year later. The linkage between Pimco and Allianz GI was challenging as, for example, both claim strength in fixed income and thus to an extent have been competing. Consequently, in 2012, parent Allianz SE adopted a two pillar model in asset management, separating Pimco and Allianz GI.
In retrospect, given subsequent changes at Pimco, this may have turned out to be a blessing in disguise – in annual results reported by its parent, Pimco saw third party net outflows hit €236bn in 2014. Parent Allianz SE saw total assets under management increased 1.8% to the end of December, although third party assets under management fell marginally to €1.313trn from €1.361trn.
For Allianz GI, however, it was its most successful year since the implementation of the two pillar strategy.
WHERE DOES ALLIANZ GI STAND NOW?
Since 2012, the manager’s assets have increased from €304bn to €412bn, the majority of which are derived from investments on the institutional side, which represents 69% of its AUM, compared to retail investors, at 31%. While the European market continues to be the core focus, with 73% of its assets domiciled in the region, the US with 19% of assets and Asia-Pacific with 7% of assets are
becoming increasingly important.
“Allianz GI is certainly benefitting from the Allianz brand, but with our investment and risk management expertise we also aim at contributing to it,” comments Tobias Christoph Pross, head of Distribution Europe and member of the European Executive Committee at Allianz GI.
Pross has been with Allianz GI since 1999, and since 2012 as a member of its board. He is upbeat about the firm’s prospects: “Building Allianz GI out of a family of independently operating entities
three years ago brought one big opportunity: we were able to export local champions, i.e. successful strategies which were only offered in one region, to other regions.”
“Just a few examples: the Allianz Income and Growth and Allianz US High Yield funds were successfully introduced in Europe and Asia; and the Allianz European Equity Dividend fund was successfully exported from Europe to Asia. This shows we have already got a very good product offering. Sometimes it is just a matter of leveraging expertise to other market places,” Pross adds.
He emphasises Allianz GI’sexperience in risk management as a key attribute: “Many institutional investors are facing the following dilemma: in order to fulfill their future pension obligations they need higher investment returns thanthe traditional low risk investment of choice – top rated government bonds – is currently offering. And this situation will most likely prevail for the foreseeable future.
“Therefore, investors have to take smart risks. They have to broaden their investment universe and go into risky assets like spread products, equities, absolute return and alternative strategies. The same holds true for private investors,” Pross argues.
In terms of distribution outlook, Pross sees the group relying on its existing presence: “We have 24 offices in 18 countries and provide global investment and research capabilities with consultative local delivery. “While the organisational setup is not static – for instance we just established a Belgian branch in Brussels – we feel we have already got a pretty good network in place.”
Consequently, he sees the key challenges ahead in developing both investment products and risk management strategies which offer investors opportunities to respond to the low yield challenge. “In the retail space our current focus is on multi-asset, and we are planning to expand our offering by a new mutual fund generation with dynamic allocation.
“Further important components of our product initiative are target date funds, income generating funds and liquid alternatives.” “With institutional clients, apart from our risk factor based equity
strategy Best Styles, and our risk optimised fixed income strategy Advanced Fixed Income, we are focusing on introducing liquid alternatives, too, as well as emerging markets and socially responsible investment strategies,” Pross concludes.