The FundForum International will take place from 6 to 8 June in Berlin. The independent industry expert and IPE Institutional Investment author Markus Hill will again moderate a panel discussion this year. He will discuss with decision-makers from family offices on the topics of asset management, due diligence, and also fund boutiques. Already in April this year, he moderated an event with Professor Dr. J. Carlos Jarillo (“Strategic Logic – The Sources of Long-Term Corporate Profitability”) on the subject of Value Investing and Private Equity, where one of the central discussion points was the ownership approach for fund boutiques and on the investor side. Editor-in-chief Frank Schnattinger talked to him about current topics that could be discussed more intensively, also against the background of previous or future events at family offices and asset managers.
IPE Institutional Investment: In June you will hold your panel discussion on the topic of family offices and due diligence in the asset management sector in Berlin. Which topics will you address this year and who are the participants?
Hill: FundForum International will take place in Berlin for the first time this year. In the previous three years, I had moderated panels with fund selectors in Monaco. I am curious to see how Berlin is perceived by the visitors of the event compared to Monaco. Of course, I am also pleased that Germany as a location for the asset management industry is being upgraded internationally as a result. In Frankfurt, there will again be a similarly broadly based BVI (BVI Asset Management Conference) event in October this year with a strong Frankfurt networking character. The panel in Berlin on June 8th will again focus on the topics of asset management, due diligence in fund selection, and fund boutiques. The panelists this time are Marcel Müller (HQ Trust), Christian Hammes (ETA Family Office), Jacob von Ganske (Deutsche Oppenheim Family Office AG), Antje Biber (Feri Trust) and Magnus von Schlieffen (Breidenbach von Schlieffen & Co.).
IPE Institutional Investment: Are there any specific points within the panel that might be of additional interest?
Hill: Of course, topics like selection criteria for asset managers are usually discussed. Also about differences and similarities in the selection of affiliated and independent asset managers. We have noticed time and again that various providers would also like to know how it is easier to come into direct contact with family offices. The usual experience often seems to be: “Don’t call us, we call you! An interesting aspect here can be the behaviour of product providers and sales in different market phases. Success factors and failure factors in fund boutique setting can also be discussed critically. Active versus passive, rule-based versus non-rule-based, the role of sustainability and impact investing, roboadvisory, and family offices – these topics are also worthy of discussion. Many of these topics are generally found among tied and independent asset managers: differentiation, discipline, transparency, and visibility. In previous years in Monaco, these topics were also controversially discussed. Other points of interest included the differentiation between liquid and non-liquid fund concepts and the role of the product’s packaging: What skills do you need as a selector for which product design? However, I do not want to anticipate all points of the discussion in detail at this point. Each of the panelists brings in his or her mark here: Origin, interests, know-how, and network.
IPE Institutional Investment: You have been intensively involved with the topic of fund boutiques for years. What topics are currently in your focus here?
Hill: Recently I had the additional opportunity to deal with the topic of value investing even more intensively. On the one hand within the scope of a selection mandate, on the other hand, I had the opportunity last year and this year to accompany various events (Frankfurt, Cologne, Hamburg) with Prof. Dr. J. Carlos Jarillo. In his lectures and publications, he has for many years been strongly involved with topics such as strategy, positioning, and competitive analysis. Of course, he spoke about his fund as a sponsor at the investor events, but in my opinion, this was not the in-house aspect of the events. I liked the fact that I was also allowed to talk about some competing products or competitor approaches in advance – as someone who speaks from an independent, commenting position, my motto: “Diversification through the use of many smart people in the portfolio”. If you look at the industry with somewhat more neutral glasses, so to speak, there are of course a great many interesting approaches in the value area. Some seasoned entrepreneurs manage funds. People with a more scientific touch, experts who come from larger companies. Or, in this case, a person who, unlike a manager from the financial sector, tends to look at companies through the eyes of a strategy professor. All approaches, ideally, find their justification with fund selectors, if only from a risk management perspective.
IPE Institutional Investment: Are there other topics that have come to your attention more strongly in the current discussion?
Hill: In general, there seems to be pressure in the market to at least examine more closely the tendency of riskier investments. This applies to fund products on the one hand, but also to direct investments – irrespective of the asset class. Family offices also often admit in discussions that there is still room for expanding their know-how, especially in the segment of investments that tend to be rather illiquid. Here, for example, in the area of real assets, AIF area, etc. You had just taken up this topic in your breakfast seminars. This year, among other things, I had stronger points of contact with this area because I spoke to many investors in Germany, Switzerland, and Austria about the interest in the US real estate market for a family business from the USA, in combination with a real estate developer – often typical family office set-up in such areas. Some family offices and other investor groups were also interested in personal contact with the product provider in some cases. The key point was that even small companies with a high degree of specialization and presumed access to interesting “off-the-market offers” are meeting with interest. Also in the private banking sector and with individual pension funds. Often less related to concrete project offers, but just as strongly marked is the interest in special know-how, where one or the other investor or product manager is aware that it is not possible to hire specialists in every specialty area. Another interesting aspect of these discussions was that many investors are very interested in exchanging ideas (products, approaches, market overview) unless these discussions are primarily sales-oriented. Or simply put: If both parties also have a sincere interest in the content of the discussed topics!
IPE Institutional Investment: Are there still typical fashionable topics in the field of liquid investments?
Hill: A current example – I am currently speaking for a group of entrepreneurs about a fund concept for the potential launch of an investment fund with a dividend focus. Here I am exchanging views with a large number of fund selectors on the pros and cons of weighting. The topic is also of interest to me because it also has a strong link to value investing and the ownership approach. Completely detached from product packaging – entrepreneurs, dividends, private equity versus family equity, and Co. – many strands of topics converge here and are reflected in every exchange of ideas with investors. Family offices, asset managers, and also smaller asset managers appreciate such approaches because of the “chemistry” – here the entrepreneur usually talks to the entrepreneur about the respective investment approaches. As in the fund boutique sector: A lively SME mindset often makes initial contact easier. The product could be a solution for the entrepreneurs’ own money, in a similar context the money of one’s own family and that of other families was managed in a similar constellation. When I address this topic, I am very often told that dividend approaches are seen as a fashionable topic on the one hand, as there is a need for dividends in the low-interest phase and new providers also enter the market. Especially since it is not so easy – quickly selecting the companies with the highest dividends – this can be a very, very big mistake. This impression is put into perspective when one deepens the conversation: Shares and dividends have always been a constant source of interest. A reassuring aspect of this discussion – here too, the market is always cleared up at the end by the whip of transparency in the mutual fund sector.
IPE Institutional Investment: Thank you very much for the interview.