Disappointing performance continues to keep three of the most powerful US asset gatherers off investment consultants’ buy lists in the UK. Capital Group, Fidelity International and Wellington Management Company won business worth tens of billions of dollars before 2001 but are fighting to hold on to market share.
One consultant said: “The common link is they each took on too much money and are struggling to find a winning formula. Handling generational change is another problem.”
He added US passive manager Vanguard had also failed to make the impact expected when it launched in Europe.
Another consultant added: “They all happen to be privately owned. They lobby to improve governance at the companies where they are shareholders but their own managements can sometimes be hierarchical and rigid.”
He said boutique operations where ownership is spread across teams of managers tend to be more nimble. Last year Capital’s ex-US international product produced only 22.2 percent against 25.7 percent from its benchmark. This was a blow to clients, given it produced 20.9 percent (13.9 percent) in 2005 after two bad years.
Capital’s institutional business, which looks after $322bn (€239bn), has lost mandates totaling $70bn over the past four years. A Capital spokesman accepted there were concerns it had taken on too much business but he said the firm continues to believe it can handle it after tweaking its research effort.
Capital has increased the size of its analyst teams and improved their regional focus: “As a result of recent improvements, our emerging markets performance has improved and we expect international to follow,” a spokesman said.