A plethora of reasons - and none of them to do with the current crisis - are encouraging US asset managers to position for expanding their businesses across Europe.
A plethora of reasons – and none of them to do with the current crisis – are encouraging US asset managers to position for expanding their businesses across Europe.
US asset management firms are expressing new interest in Europe, despite sagging markets and the looming shadow of the eurozone debt crisis.
The creation of the eurozone ten years ago offered a prospect of a more integrated, if not homogenous, Europe. Penetration of the market has never been easy, given the multiplicity of languages and dialects, regulatory regimes, distribution channels and strongly defended local cultures.
Many US banks or their international asset management divisions have been well established across the region for years, although at the height of the boom market ten years ago, others believed that a hop across the ‘Pond', with a brief stop in London, would land them right in the middle of a growing and newly confident market.
Within months, in some cases, it became apparent that barriers to entry in Europe were higher than many aspiring firms had calculated, and the expansionary ventures proved an expensive foray from which they had to retreat empty handed.
Even for those who survived the initial test, sliding markets following one crisis after another have prompted them to return to the relative safety of home markets.
But there is value, and there is once-in-a-generation opportunity, which many managers believe Europe presents right now. Not for a generation has it been so cheap to buy, and for ambitious asset managers wanting a global presence, increasing regulatory pressures are likely to lead to a break up of larger firms spinning off non-core businesses.
Among those announcing initiatives into Europe in recent weeks have been Wells Fargo Asset Management, Eaton Vance and Calamos. The global active manager MFS International is also spending, as is Janus Capital International.
Looking at expansion
However, none cite M&A opportunities, or even cheap assets, as the reason for their interest. Wells Fargo Asset Management, a part of the San Francisco-based bank Wells Fargo, is set for a major strategic push into Europe and Asia as part of a drive to diversify away from the maturing US market.
"We started looking at this expansion well before 2008," said Karla Rabusch. A vice-president of Wells Fargo & Company, she is also president of Wells Fargo Advantage Funds, part of the corporate's Asset Management division, and head of Wells Fargo Funds Management LLC, the unit spearheading the European campaign, from a London base.
The US is no longer growing as quickly as other areas of the world," she adds. "We have been looking for some time to leverage our strengths in Europe and Asia, and Europe does after all account for 35% of mutual fund assets in the world."
In the US the firm is the 11th-largest among asset managers. The group has 80 business lines, with 30 offices in 130 countries focused on providing US clients with services abroad. Globally, the asset management business has some $450bn in assets under management.