Fund selection lost in translation

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Jean-François Hautemulle reshuffled the fund selection process at UniCredit Private Bank. Based on a truly pan-European approach, he tries to promote transparency and avoid bad surprises.

Fund selection in Europe is a highly complex matter. Tens of thousands of funds compete for client money across the 30 countries of the European Economic Area with their different financial cultures, languages and latest trends.

Jean-François Hautemulle, head of fund selection at UniCredit Private Banking, had to integrate different approaches to picking funds to get fund ­selection under way at one of Europe’s largest private banking ­networks.

The cultures within the UniCredit network were all over the place. With the acquisition of Germany’s Bayerischen Hypo- und Vereinsbank (HVB) in 2005, the Italian bank had tapped into the German and Austrian markets, which worked very differently from the home market.

“We started in a situation with a very closed ­architecture in Italy, with originally four partners,” he explains. “On the other hand, we had Germany, which had more than 160 distribution agreements and 400 funds on the r­ecommendation list. Austria was actually nicely in the middle. What we tried to do was harmonise our fund selection process across our core countries.”

He is responsible for fund analysts in Austria, Germany and Italy, selecting funds for the UniCredit network, which has 235,000 clients with more than €150bn of assets. Roughly €13bn is invested in mutual funds.

In a lengthy process, the UniCredit team had to ­reconcile a number of approaches. German fund ­analysts from HVB relied heavily on quantitative models, while their Italian ­colleagues used a qualitative approach. The ­UniCredit team has redrawn the process and shied away from the open architecture approach employed in Germany.

Instead, UniCredit has started to work with a Preferred Partner Programme in its private bank. Funds of ten ­partners (see list, right) are distributed within the network, by far a smaller range than the 160 distribution ­agreements that were normal in the German market.

The focused approach has its reasons, as Hautemulle explains. “A more ­complicated market is not necessarily better for the client. There is a lot happening between the fund manager and the client – analysis and research – and unless you keep the process straightforward, every step of the way there will be something lost in ­translation.”

Simplicity in the international context means leaving less room for local anomalies, such as distribution ­agreements with smaller, local players. The Frenchman, who is based in Munich for UniCredit, tries to make the fund selection process as pan-European as possible.

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