Independent asset managers (fund boutiques) have been the focus of institutional investors in the area of fund selection for years. Markus Hill* spoke on behalf of FONDSBOUTIQUEN.DE with Daniel Knoerr, Head of Product Management & Unit Linked Business at Ampega Investment GmbH, about key issues that are addressed in the design, process, and launch of private label funds. Topics such as the evaluation of derivative strategies, current fund projects, the importance of marketing and sales support for capital management companies, and the significance of ESG in asset management were also addressed. The experience gained in the area of “lived agility” in projects and processes in the Group division also appears interesting.
Hill: What exactly is your area of responsibility at Ampega?
Knoerr: In my new function I am responsible, among other things, for the acquisition of administrative mandates and for looking after label funds and clients. My other responsibilities include product development and product management. This also includes, for example, the preparation of mandatory publications such as sales prospectuses or (semi-) annual reports. Besides, my team is responsible for the product development of the unit-linked life insurance tariffs of the various life insurers of the Talanx Group.
Hill: What do you consider to be the main steps in the PLF concept review? Have you been able to identify some factors for successful concepts?
Knoerr: In terms of methodology, when evaluating new projects in the private label funds sector, we orient ourselves very strongly towards the “business model canvas” from a lean startup. This means that the value proposition of the product must be worked out and it must be examined based on various criteria to see whether the realization of the product will deliver long-term value contributions for all parties involved – the investment company, the initiator, or advisor and the custodian. We ask ourselves the following questions, for example, without claiming to be exhaustive:
- Which investment idea or investment case will be implemented and does the initiator have the expertise and track records?
- What benefits do our sales partners and distribution channels derive from the product launch?
- Do we possibly have a competitive advantage? (Example: First Mover-Advantage)
- What could be the drivers of success? Who supports us? Who benefits from the implementation? (This could be a large anchor investor providing seed capital, for example).
- What obstacles and expenses could arise on the way to fund launch? For example, can all instruments be mapped and valued or does a new custodian need to be connected?
- What internal and external resources do we need for the implementation? (External resources could for example be a portfolio / or order management system, which the partner uses and has to communicate with the internal investment company systems.
We are very thorough in dealing with these and other more detailed questions. What is important for us here is the interaction between the sales and product management departments and coordination with other important internal and external interfaces.
Hill: You have a long experience in fund selection, at the beginning of this year you were also on Citywire’s TOP 100 fund manager list in Germany. You were able to view many fund approaches in this function through the “investor’s lens”, an experience that is helpful in due diligence. What is your attitude towards the use of derivatives in fund concepts in the private label fund segment?
Knoerr: My previous experience as a fund selector is very helpful in assessing fund concepts in fund boutiques. The use of derivatives is often a component of concepts and must, therefore, be mapped, managed, and monitored. Hedging instruments are used in most cases. If derivative strategies are used, for example, to collect risk premiums, it often becomes more complex. In my view, it should always be considered whether the strategy can be implemented sensibly in the UCITS framework and above all under the current set of requirements (keyword: risk controlling) of the investment company to fully develop its benefits. This year we have already seen some negative examples during the turbulent market phase in March. We try to identify such pitfalls in advance of the launch and would reject the mandate if in doubt.
Hill: What was your area of responsibility before you changed?
Knoerr: Before my change, I had various responsibilities within the Group. As you briefly described above, I was a portfolio manager of several mutual funds of funds and portfolio manager of unit-linked life insurance policies. Also, I was responsible for fund selection for the various carrier companies in the Talanx Group and was a project manager and product owner in the ESG project “Capital Investment” in the Talanx Group.
Hill: Which concepts are currently being launched in your company?
Knoerr: We have now realized the “FAROS Listed Real Assets AMI” in cooperation with the consultant FAROS and launched it a month ago. REITs, which are largely unknown in Germany, offer many advantages for investors who want to invest in real estate. They are often more stable than shares, pay high dividends, and are also very liquid. In the fund, we also offer investors broad access to other real estate investment themes from the bond sector, such as corporates or property-secured bonds. Currently, there are other exciting projects about to be launched, both public and special fund mandates. I am very excited about one fund project: a biotechnology fund which we will implement with the provider LUNIS.
Hill: Are you also involved in the examination of fund concepts in the non-liquid sector?
Knoerr: We are a full-range provider and offer asset management services for real estate, private equity, and infrastructure investments in addition to liquid asset classes. As a specialist, Ampega Real Estate bundles the entire value chain from acquisition through project development and portfolio optimization to disinvestment in a separate company. One of the biggest growth drivers is the Infrastructure Investments segment. Here the Group has systematically built up expertise and since the beginning of 2014 has been participating in selected projects with a new, specialized unit also directly through equity and debt financing. The diversified infrastructure portfolio currently includes investments in wind farms (onshore and offshore), solar parks (PV), electricity grids, transport infrastructure, and public-private partnership (PPP) projects in Germany and other European countries.
Hill: What significance does the topic of marketing and sales support have for your company?
Knoerr: The support of our partners plays a central role for us and is included in our service package for our partners (without additional fee). Each partner is supported in the best possible way by a colleague from the sales department and product management. We are currently continuing our fund manager rounds, which have been very successful in recent years, in webinar format. We are noticing that the number of participants in these offerings is greater than in pure face-to-face meetings. This demonstrates the consistently high information requirements of our sales partners and has a lasting effect on the planning of our communications. We will continue to expand our digital offering because we, too, are finding that fast and resource-saving communication is becoming increasingly important. This enables us to respond even more flexibly to the current needs of our customers. These mainly consist of information on the development and orientation of individual fund products. Besides, questions are asked about alternative product solutions in the special market phase. We can offer our label partners strategic recommendations for the current market environment based on our daily analysis and assessment. This is an absolute added value and strengthens the trusting cooperation in a profound and lasting way. Even in times of the nationwide mobile working mode, we are doing well in the Group so far. Last year, we already enabled the company-wide introduction of mobile working and successfully tested it both as a test and subsequently for the entire organization. We were able to establish that all forms of work and organization can be implemented perfectly and that there were no restrictions on sales and customer service or marketing support.
Hill: ESG is an intensively discussed topic among many asset managers. How do you view this topic? How is your company positioned in this segment?
Knoerr: I have been convinced for years that ESG will become the new market standard in the asset management industry in the short to medium term due to the current density of regulation. Sustainability and ESG must become an integral part of every asset manager. To achieve this, however, companies must think in new dimensions and develop their ESG vision. Many asset managers have been resting on their ESG product lines for a very long time – some have done little or nothing about the subject. This is now taking its revenge. Embedding your sustainability philosophy into corporate DNA is a major challenge and requires time, commitment, and resources. As Ampega’s asset manager we have many roles, stakeholders, and perspectives that need to be taken into account. These include, for example, the asset manager of the various Talanx companies, the provider of admin services in institutional third-party business, the partner for our private label fund clients in the retail fund business. The various facets and shades of sustainability must be sensibly interlinked and must not be allowed to counteract each other. Several years ago we founded an agile project team that tries to embed sustainability initiatives into the change activities of the company in a meaningful way. Besides, various ESG committees draw up concrete recommendations for ESG integration, engagement, or proxy voting guidelines for the various client segments. More than ten years ago Ampega launched a dedicated product range with an ESG focus in cooperation with the Franciscan Mission Centre. This partnership is a good example of a credible commitment to ESG. Clients understand this too.
Hill: What are you currently working on more intensively?
Knoerr: I am a big fan of the Agility Principles and am committed to agile transformation at Talanx. The aforementioned business model canvas is one of the templates for evaluating (fund) projects that has now found its way into everyday work. In general, I am a friend of a lot of communication, great transparency, and ownership in action. I believe in the self-organization and responsibility of the individual and not in hierarchical “command & control” in the reporting line. If we manage to give the employees more freedom and responsibility for their subject areas again, the whole organization will also benefit, of that, I am firmly convinced. In the project environment, there are already many positive beacons for agile work, in the “classic” line activity of asset managers, there is certainly still a lot of room for improvement.
Hill: Many thanks for the interview.
Link to Ampega Investment GmbH: https://www.ampega.de
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