Platform model pays off as crises hit rivals

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Universal-Investment’s Bernd Vorbeck describes the German platform advantage.

 

Such key attributes have helped Universal-Investment break through the €100bn barrier for funds under administration in 2009, and then exceed 1,000 fund mandates in 2010.

The firm has also expanded recently by establishing the Universal-Investment Securitisation Solutions Unit, and last year added the administration of property funds for institutional investors to its list of services. It has grown to be the second largest investment firm for bespoke Spezial mandates, Germany’s fifth largest investment firm overall, and “almost the only one which is not tied to another business,” Vorbeck says.

Two of Germany’s leading private banks recently increased their financial interest in the diversified group by buying stakes from a third – Hauck & Aufhäuser Privatbankiers – which has been another long-term supporter.
Landesbank Baden-Württemberg is its other shareholder.

Vorbeck stresses that although its shareholders are potentially fund managers, all fund partners can be assured that their strategies will remain within
Universal-Investment’s walls.

“If, for example, a wealth manager brings a client to us, then he knows very specifically that neither the terms of his business nor other information will be used in any other way. We are a wholly neutral platform.”

Apart from its independence, Universal-Investment also differentiates itself from some competitors by being onshore and centred on regulated products, as opposed to offshore hedge funds squashed into managed account format, at some competitors.

Universal-Investment’s Luxembourg subsidiary has assets of almost €10bn. Its Austrian venture, Masterinvest, is that country’s sixth largest investment firm, providing ‘insourcing’ for managers and allocators alike.

“We are in all the important domiciles that clients need, and all the funds are onshore in the European regulated field,” says Vorbeck.

Universal-Investment expanded its offerings by acquiring SEB Master KAG, the hedge fund arm of SEB Asset Management, and last year branched into
administration of institutional property funds.

In terms of asset classes that end-clients will find in funds by Universal-Investment, Vorbeck says there is everything that can sensibly be run inside regulated vehicles and separate mandates, bearing in mind complexity and liquidity.

Universal-Investment has no doubt benefited from the clear trend among European investors to seek out onshore regulated products instead of the offshore structures that caused so many of the problems during the financial
crisis of 2008-09. Gating, suspending redemptions and otherwise locking investors into funds were measures that infuriated shareholders in many Cayman Islands funds.

“A lot of institutional investors realised during the crisis that they were in illiquid hedge fund structures, and that led to a change of thinking, which one sees all over Europe.”

The same crisis also gave birth to an impetus, in Europe and beyond, for tighter regulation of the financial community including asset managers, pushing them
towards Ucits- or Ucits-like structures. Vorbeck says this trend plays in the favour of Universal-Investment.

“Personally, I believe the regulatory demands will rise in Europe, especially Germany and Luxembourg. With all the complexity that is coming, for example, with more complex asset classes, we believe that the trend to higher regulation also favours the demands on platforms.”

To ensure its managers are appropriate and can meet such standards, the team of Universal-Investment also conducts due diligence on them before working for them, or rejecting them.

The analysis ranges from the manager’s operational capabilities to their organisational and b usiness backgrounds, whether they have their own money in their fund, and who they have filling key positions.

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