In his first interview since becoming Threadneedle CEO, Campbell Fleming says outperformance alone is no longer enough for a top tier asset manager - and expresses concern charges may go up 'at every level' post-RDR.
For new Threadneedle CEO Campbell Fleming (pictured), the task facing him at the UK’s fourth largest retail fund manager is “evolution, not revolution”.
The Australian took over the business at the start of March, replacing Crispin Henderson, who moved upstairs at parent Ameriprise Financial, and now oversees a business with £84bn in assets under management.
That figure is increasingly being driven by retail flows. Although legacy outflows in its institutional business continued, Threadneedle took in £893m in net retail business in Q1 2013; the highest level since Q2 2011.
Threadneedle CEO on performance and fees
Those flows have been driven by the fund house’s investment performance. According to the group, 68% of funds are ahead of benchmark over one year, rising to 79% over three years and 80% over five years.
Fleming, however, is insistent that outperformance alone is no longer enough for a top tier asset manager.
“We have hit record AUM and are seeing record flows. But it is not enough just to deliver top performance,” he said.
The focus is increasingly also on both the environment in which that performance occurs, and the group’s relationships with clients.
Threadneedle wants to be at the vanguard of projects seeking greater price transparency across the industry - such as the IMA’s ‘total cost of ownership’ initiative.
Fleming described the group’s offering as “top quartile performance at above median prices”, but said any price premium must be justified not just by performance, but by the environment in which a fund group operates.
“If you are going to suggest you are a premium player, you need to have a controlled environment. Clients need to know they are dealing with a firm that is as well managed and resourced as it can be.”
The CEO also highlighted the rising costs facing the industry as a whole, a trend which suggests the need to justify premium prices or leveraging economies of scale is more crucial than ever.
“With rising regulatory requirements, fixed costs, an industrial product set to sustain and the need to be a long-term commercial player, it is going to be a bit difficult to deliver this quality at costs much lower than they are already.
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