Choice no barrier to offshore

2007 has seen an unprecedented number of new players looking to break into the UK retail space with offshore offerings.

Among the groups opening up large offshore umbrellas to UK clients include Denver-based Janus Capital International, Swiss giant Julius Baer and Deutsche Bank. What is interesting is the sheer number of offshore funds the respective groups are seeking to bring to the UK.

Julius Baer is seeking UK distributor status for 42 equity and bond funds domiciled in Luxembourg. The 42 portfolios are split between two umbrellas dubbed Multibond and Multistock, and the FSA recognised both last October.

Meanwhile, Janus Capital International is bringing six funds to the UK market, with a further four to follow later this year. All six focus solely on the US equity market

Deutsche Bank is also adding distributor status to its 57-strong range of DWS-branded SICAVs, two years after it effectively withdrew from the UK market in 2005, selling the DWS retail funds business to Aberdeen. DWS SICAV range currently includes 30 equity funds, 22 fixed interest mandates and five money market/currency offerings.

Justin Modray, of financial adviser BestInvest, says the move by some big-name players into the UK follows groups adopting UCITS III legislation, allowing them to market funds across Europe.

“Groups are seeing the opportunity to market funds with a foothold in other European countries into the UK." Modray warns, however, that there is risk of advisers getting overwhelmed with the number of funds entering an already crowded market.

“One area that a group entering the UK can succeed in is if they have one or two funds with excellent track records and a star fund manager. Alternatively, the group may have funds operating in niche areas such as soft commodities or the long/short space.”

While in the past, many groups felt they had to have a basic core list of products to get onto adviser radars the rise of boutiques has shown this is no longer necessary, and only the very largest groups are now making a genuine attempt to compete across every asset class.

South Africa’s Standard Bank is one such new player in the market offering advisers two Dublin-domiciled OEICs which both invest in African equity markets. The group is one the biggest investors of that continent, and can claim to have local expertise in the regions.

Allianz Global Investors, which already has a presence in the UK, is launching 25 further funds into the UK, the majority through its Pimco subsidiary. Pimco is recognised as one of the leading bond fund managers.

Modray says an area the new groups might look to take advantage of is the number of funds soft-closing in the UK as they reach capacity.

“With-profits money is to continue to flood into the UK market over the next five to 10 years and this money has to go somewhere. Not all the new players will succeed, but I definitely see more fund groups coming onto the advisers radar in coming years.”

1 September 2007