Since 2010, to grow its business despite the sluggish domestic market, Italy's asset manager Azimut has announced a strategy of internationalization to tap opportunities in emerging economies with a significant demographic potential.
Since 2010, to grow its business despite the sluggish domestic market, Italy’s asset manager Azimut has announced a strategy of internationalization to tap opportunities in emerging economies with a significant demographic potential.
Following partnerships signed in China and in Turkey, the firm is now looking to implement a similar joint venture to land in Brazil.
In a keynote speech at Investment Europe’s Fund Selector Forum in Milan, Paola Mungo, managing director at the firm, confirmed that Azimut’s target is to reach 10% of assets under management in foreign markets by 2014.
“The search for emerging markets to distribute our funds has been driven by where middle class’ investments will come from 5 years from now. This has led us to identify China, India, Russia, Indonesia, Turkey, Mexico and South Africa,” she said.
China’s potential is “too big to be disregarded”. For this reason, two years ago Azimut chose the country as its first foreign destination outside Europe (the firm already had offices in Luxembourg and Ireland).
“China is the second world’s 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 is 17%,” Mungo said.
The local asset management industry is also highly competitive. About 70 asset managers in the country, of which 31 with a foreign partner, manage 956 funds for about 2,000 trillion renminbi.
Azimut signed a partnership with a local manager in 2010, through which it controls two local asset managers in Hong Kong and Shanghai.
In April 2012, the asset manager launched Cash Plus, a Chinese-law fund managed by An Zhong (AZ) Investment Management Shanghai, Azimut’s holding in mainland China.
Back in Italy, Azimut has been a pioneer in the development of a renminbi product range for Italian investors.
In June 2011, the company launched its RMB Opportunities fund, one of the largest Ucits IV funds focusing on offshore renminbi investments. The fund currently has €650m under management.
The fund has taken a ‘cash plus’ strategy and a conservative approach to investments, which aims to minimise credit risk. Current returns stand at 3.04%. The focus of the fund is the currency. For this reason, RMB Opportunities invests in low-volatility assets and has a relatively short duration of only eight months.
But it’s not all about China. A few weeks ago, Azimut unveiled a joint venture to operate in Turkey with local firm Global Investment Holdings, which will be operational through a company dubbed Az Global.
During her speech, Mungo highlighted Turkey’s potential: 75m people with an average age of 29 years.
In 2013, Az Global is set to offer six funds to retail clients in Turkey, 90% of which investing in equities, with the aim is to attract €350m assets under management in 4 years.
Looking ahead, Mungo confirmed a strong commitment to replicate this business model in Brazil, where the managing director recently spent a few days to meet potential partners for a joint venture.
“As in the case of Turkey, in Brazil the market is dynamic and there is interesting potential. We have not signed any agreement yet and we cannot confirm a date for the new partnership, but we feel we have to be there to take a share of it. In order to grow, an Italian asset manager today has to look oustide its home market,” she said.