DeAM seeks cure for asset management ills
Asset managers' clients are increasingly demanding specialist input to mandates. It's a demand best met by boutiques or big firms that have set up boutique-like teams. Deutsche Asset Management has been tardy in responding to these pressures. It is now changing its style, but has it left it too late?
LAST MONTH'S REMOVAL of Tom Hughes from the post of global head of asset management at Deutsche Asset Management caps a dreadful year for a business once regarded as a top player in the large and lucrative UK fund management market. Poor performance has led to an outflow of funds and loss of clients. The firm is now overhauling senior management and refining its entire business model in an attempt to overcome these setbacks. In doing so, DeAM must face up to the familiar challenges besetting all its large rivals: how to attract, retain and motivate within a large organization individuals capable of producing high performance in the increasingly specialized mandates that clients now demand. Specialist boutiques are eating away at the large fund managers' business, increasing competition and reducing margins. DeAM has been late to respond to these challenges. If it cannot make a success of its latest revamp, Deutsche Bank might begin to wonder whether UK institutional asset management is a good business to continue in.
"Deutsche Bank chairman Josef Ackermann's track record shows that he is willing to sell of parts of the business," says a former insider. Last year Deutsche sold off its private equity portfolio, DB Capital Partners, to its management, and sold its global passive business to Northern Trust.