Sometimes referred to as the ‘biggest manager you have never heard of’, Jonathan Boyd has caught up with PGIM for insight into its Europe region developments as part of global expansion
The adage of being a larger asset manager that is, perhaps, less well known is one that is being left by the wayside as PGIM, the asset manager of life insurer Prudential Financial, seeks to build its presence globally - including across Europe.
Part of the context of this growth is the name itself. Adopted in 2016, the PGIM name replaced Prudential Investment Management and Pramerica, the latter being used in markets where UK insurer Prudential - a different company to Jersey, US based Prudential Financial - had kept naming rights.
With some $1.3trn of AUM, PGIM ranks as a top 10 manager globally, albeit with a business weighting towards its home market; with some 7% of that total AUM originating from Europe, the Middle East and Africa, the firm has been beefing up its presence in the EMEA space.
As evidence of this, Kimberly LaPointe, the head of PGIM Investments International, relocated to the UK in the summer of 2019.
PGIM Investments is the global manufacturer and fund distributor in PGIM's multi-affiliate structure alongside several asset management divisions including PGIM Fixed Income, Jennison Associates, QMA, PGIM Private Capital, PGIM Real Estate, PGIM Real Estate Finance and PGIM Global Partners.
PGIM Investments' AUM is some $116bn,of which Ucits AUM currently stands around $4.6bn.
"The individual affiliates have the autonomy to run their own businesses, and are accountable for their investment performance," explains LaPointe.
"To signify our strength, we needed a single name and felt PGIM was most suitable. It also came out of wanting to expand globally where most growth has historically been in the US."
The strategy also reflects what PGIM feels is shifting ground in the intermediary space. There it sees demand to do business with fewer, larger players, especially among private banks seeking to serve a global client base; such banks are looking for partners able to offer global asset management services, including support on the ground. This globalisation has become what LaPointe describes as a natural evolution of the existing US intermediary business.
Institutionally, PGIM ranks seventh largest, claiming 159 of the top 300 global pension funds and 21 of the top 25 US corporate pension plans as clients.
"As our client base globalises, we need to globalise the business to serve them," LaPointe says.
Growing internationally requires a methodical approach, LaPointe continues. PGIM has seen a number of competitors overinvest too quickly to achieve this, hence there is still reliance on the home office in the US together with adding local talent.
Currently, there are offices in 29 cities across 15 countries, with the London office of over 250 staff being the largest outside the US. Continued net positive inflows from the third party business over some 16 years has also helped support the evolvement of local presence, LaPointe adds. Along with London, the European presence currently consists of Amsterdam, Luxembourg, Dublin, Frankfurt, Munich, Zurich and Paris. Additional offices are yet to be confirmed, but the relocation of LaPointe herself points to the underlying desire of PGIM and PGIM Investments International to commit to the European cross border market and insights into demands of local fund selectors, she suggests.
There are three key trends being seen among clients, LaPointe notes. The first is the search for yield and income; another is finding growth opportunities amidst a slowing global economy; and, lastly, dealing with increased market volatility.
Each of these is playing out globally, and for each there are different ways to approach investments through the multiaffiliate model that PGIM offers. At the product level this can take the form of high yield, global equity opportunities or liquid alternative strategies, such as Global Macro.
"The multi-affiliate model means we can provide different solutions to different clients, and helps distinguish ourselves. We also have private capabilities, for example in the area of private real estate," LaPointe notes.
"We are an active house. We do not see it as active versus passive; it is active and passive. But, if offering active, you need to deliver consistent performance at the right price."
"We see a world of high active share sitting comfortably alongside passive, but it will shine a light on managers' ability to deliver alpha. We are confident it is an environment in which we can perform well."
PGIM Investments International has opted to develop a suite of Irish domiciled Ucits funds, and it feels prepared for whatever the Brexit uncertainty may cast up in terms of challenges to Europe's cross border funds universe.
"We have invested in compliance, lawyers and so on, to prepare. We have opened a Netherlands office and feel we have enough contingency options," says LaPointe.
"We continue to think about where to add offices and local expertise. We have a joint venture in Italy already, so we are more focused on northern Europe.
"If you think about the growth of European and Global Private Banks; the growth is coming out of Asia. So, we are thinking long and hard about Asia and how important it is to the European Private Banks, and how that affects product development and support.
"This is on our clients' minds, so it is on our minds."
LaPointe's remit is to cover all of Europe geographically, but the focus is on what could be thought of as the traditional core fund markets. The idea is to build scale then figure out the expansion.
"We need to be sensitive to serving the footprint of our clients, which is to focus on core Europe then evaluate the next steps. We are currently in 13 European countries from a registration perspective."
Kimberly LaPointe is the head of PGIM Investments International, responsible for business strategy, governance, operations, and distribution of the firm's asset management capabilities through financial intermediaries throughout EMEA, APAC, Latin America, and US private banks. Based in London, LaPointe joined the firm in October 2005, having spent the previous 10 years as a senior member of the team that developed JP Morgan Asset Management's third party distribution business. She began her career as a global fixed income analyst at Dean Witter. Overall, she has more than 25 years' experience in the financial services industry, and holds US Finra Series 7, 63 and 26 licences.
For more content from the November 2019 issue of the InvestmentEurope magazine, click here: https://www.investmenteurope.net/digital-editions/4006715/106-election-expections