As a headhunter with a special focus on the asset management industry, I have often found that the business head responsible for Iberia was also good enough for Latin America, even though the person was based in Spain, London, or other European financial centers. I believe that these managerial decisions do not fit with current market trends which are mainly based on strategies highly focused on partnership with business associated on location and third party distribution structures, totally directed towards the penetration and growth within the investment world of pension funds with a primary focus in Chile within the AFP segment, including Peru and Colombia.
However, today there is a better understanding among those in the business of funds sales that brings up the question of whether this is really the right strategy or if they are missing an important market share… The market has evolved and managers are obliged to do likewise in their business strategies. The past international managers’ agreements with local correspondents to meet their business relationships with major players in the buy side of the industry (AFPs, AFORES … first in Chile and then to a greater or lesser extent Peru and Colombia), are giving way the analysis of managing potential conflicts of interest in their representatives, the transfer of income and, most importantly, realize that today the buy side want your counterpart to be based locally. It has also opened the door to a market beyond pensions. And it is the distribution market through private banks, broker dealers, family offices… in countries with excellent growth strategies and professionalization of its industry, where the regulator increasingly allows greater international exposure … to this we can also add the recent granting of important management mandates in the region.
Chile pioneered AFPs industry – private fund managers – with a turnover of over US$150 billion, with figures that will further international investments, today and some other firms such as JP Morgan, Schroders double those of just five years ago. Colombia and Peru are both boiling with pension systems increasingly sophisticated and open to actively managed funds, private equity, thematic funds, structured notes … as well as insurers, trusts, etc. …. distribution networks and private banking ….. Family offices, whether of the single and multi types, with capabilities to execute above US$10 million tickets. A market like Mexico, with fresh air under a new government with a new industry which has already reached US$ 250 billion between mutual and pension funds and pondering whether or not to open to active management. Blackrock signed their first agreements of asset managers that receive attractive mandates from the Afores, in this case Banamex, while Sura Afore just announced the same with Pioneer, Investec, Morgan Stanley and Blackrock. Not to mention Brazil, a country with a high development in the international investment where large houses have wanted to make local acquisitions to take relevant market positioning.
No doubt Latin America has much to contribute. The market is fully alive and growing, where in order to take advantage of the opportunities you have, without a doubt, to be close to your client and potential business. Sooner or later location will be crucial for business expansion, but today firms are already entering the feasibility analysis phase and market positioning, and more importantly, firms are evaluating what is the opportunity cost of not being present. Some have already arrived, very few were pioneers, others are doing prospective trips, and there are still many who still are considering it … What I think it is very clear, Latin America is not Iberia ….
