Italy’s Azimut seeks growth in emerging markets
Italian asset manager Azimut explains the attraction of doing business in countries such as China, Turkey and Brazil.
After two quarters of net outflows, between June and September the Italian asset management industry was back into positive territory with €1.4bn inflows, closing the third quarter just short of €1trn assets under management (€992bn).
Data released by industry association Assogestioni confirmed a positive sentiment for the domestic market. Despite the peripheral European debt crisis, the uncertain political outlook and contagion effects from neighbouring Spain and Greece on its banks, Italy still offers opportunities for domestic and international asset managers able to understand the peculiarities of the local market and to shape their business model accordingly.
Firms are definitely not in a ‘wait-and-see’ mode. While new players are expected to make their debut in Milan at the beginning of 2013 (including Petercam, see page 16 for details), local firms are investing in technology, education to financial advisers and to leverage their presence in emerging markets.
This is the case for Azimut, which, following the launch of joint ventures in China and Turkey, is now looking at Brazil, where it has already shortlisted candidates to join forces in the market. Over the past few years, the Milan-based asset manager posted a constant growth of managed assets: +28% since 2008 and +17% since the beginning of 2012.
At the end of October, a month where the firm recorded €125m inflows, Azimut reached €19.3bn of assets under management and administration.
“The outlook for the Italian asset management industry is stable. Increased market volatility has shifted the focus on low-risk tools,” says managing director Paola Mungo (pictured).
For local players, challengers are posed by legislative changes and by a new distribution structure.
“In line with what is happening at a European level, the role of financial advisers is becoming more relevant,” says Mungo.
Italian investors are also lacking appetite for mediumto long-term investment products, and data show liquidity weights for about 30% of Italy’s households allocation.
“We have anticipated those trends and launched target funds and funds for currencies and rates diversification. We have also favoured the creation of multi-manager funds,” Mungo says.
In 2010, Azimut announced a significant internationalisation strategy and the firm’s target is to reach 10% of assets under management in foreign markets by 2014. This share is currently at 5%.
“The decision to distribute our funds in emerging markets has been driven by the potential growth of middle class investments five years from now,” Mungo explains.
This may suggest to identify China, India, Russia, Indonesia, Turkey, and South Africa as key destinations.
China’s potential is “too big to be disregarded”. For this reason, two years ago Azimut chose the country as its first foreign market outside Europe.
“China is the world’s second-largest economy, but its funds industry is only number 11 in the world. The asset management industry weights for 6.5% of gross domestic product. By comparison, in Italy it is 17%,” Mungo adds.
The local asset management industry is also highly competitive. There are about 70 asset managers in China, of which 31 are in partnership with a foreign firm, managing 956 funds of about CNY2,000trn.
Azimut signed a partnership with a Hong Kong based manager CMT Holding in 2010, through which it controls two local firms in Hong Kong and Shanghai.