Flush with cash, treasurers are turning to outside firms to oversee some of the money.
UNDER NEW MANAGEMENT
Winners List | Winners Profile
With company balance sheets bulging with cash, a growing number of corporates are considering different ways to manage the excess liquidity. Certainly, banks are growing reluctant to accept sizable, non-operating cash deposits. The funds could be suddenly withdrawn. Moreover, the deposits require financial institutions to hold higher capital reserves to meet regulatory requirements.
Asset managers, however, are happy to help corporate treasurers put the money to use. The outside advisers are working with clients to identify and manage suitable investments—often, low-risk, liquid products with acceptable yields. Treasurers say finding those kinds of investments is typically their biggest investment challenge.
Commercial paper and money market funds are the traditional vehicles for parking corporate cash while generating yield, albeit a small amount. And some companies are putting capital into short-term bond funds (including exchange-traded funds), which generate greater returns. Corporate investments in all these vehicles could grow over time, treasurers say.
Asset managers, however, are developing new products to attract corporate cash. One example: Separately managed accounts that strictly follow corporate investment guidelines for liquid assets. Those policies generally restrict investments to fixed-income securities with high credit ratings and low risk profiles. Consultants, though, say company investment committees are more willing these days to rejigger the rules to include a wider range of assets—such as real estate and commodities—and active investment strategies.
Meanwhile, treasurers continue to hone their investment skills, putting them in a better position to manage an array of instruments, according to the fourth annual Corporate Cash Investment Report, by Sungard, a seller of asset-management software. Indeed, treasury workstations will soon need to incorporate multi-asset electronic dealing portals, Sungard claims. Some workstations already have such capabilities.
There are some concerns, however, about this new wave of corporate investing. The International Monetary Fund warns that investing in mutual funds, as opposed to direct investing, can increase the likelihood of distressed asset sales if a financial crisis hits. Even simple investments such as mutual funds can pose financial stability risks, and regulators need to know more about them through hands-on supervision, the IMF says. The asset-management industry manages more than $75 trillion of assets globally, exceeding 100% of world GDP.
Still, the shift to a less-conservative use of corporate cash isn’t likely to end anytime soon. Treasurers are getting better and better at forecasting cash flows. As such, they are becoming more willing to direct a portion of their reserves into longer-term instruments that offer higher yields—yet meet company guidelines. To do so, treasurers are increasingly turning to outside managers to select and oversee investments that tick all the boxes.
With these awards, Global Finance recognizes those asset managers that excel at executing on discretionary mandates from nonfinancial corporations.
WINNERS LIST
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WINNERS PROFILE
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GLOBAL WINNERS
Best Bank | Deutsche Asset & Wealth Management
With roughly $1.4 trillion in assets under management, Deutsche Asset & Wealth Management ranks among the 10 largest bank-owned asset managers globally. The asset management division has a presence in 40 countries; the group on the whole is active in 71 countries. Not surprisingly, the firm stands out for its worldwide reach, which provides clients with both a global perspective and local knowledge. Deutsche AWM, which runs a sizable corporate asset management operation, is a big player in alternative investments, particularly real estate. It’s well known for product innovation.
Best Independent | Aberdeen Asset Management
Aberdeen Asset Management receives 97% of its revenue from recurring management fees. With $515 billion of assets under management, Aberdeen has grown from its Scottish base to become a global, independent investment manager with 33 offices in 27 countries. It is a leading provider of liquidity solutions across major currencies, as well as a top asset manager in emerging and frontier markets. The company’s liquidity products include overnight funds, three-month cash-plus funds, and short-term bond funds. Aberdeen recently introduced a global multi-asset income fund, managed out of Edinburgh. The fund’s asset allocation is determined by yield expectations across a range of assets.
Most Innovative | ICICI Prudential Asset Management
ICICI Prudential is one of the leading money managers in India, with assets under management of about $24 billion. The company is a joint venture of ICICI Bank and Prudential of the UK. It has more than 65 funds, which it manages strictly, according to mandate. ICICI Pru offers structured products, ultra-short-term funds and interval funds, which periodically offer to buy back shares from investors. ICICI Pru’s mobile application enables investors to access detailed information about their accounts and portfolios and to purchase, redeem and switch investments between funds.
Best Manager Based In Emerging Markets | Bradesco Asset Management
Brazil-based Bradesco Asset Management manages assets for more than 5,000 companies, including middle-market and blue-chip corporations from around the world. BRAM’s corporate mandates typically focus on fixed-income investments, with restrictions on risk and duration. The majority of these products are money market funds, Brazilian sovereign funds and corporate bond funds. BRAM offers a family of funds dedicated to corporations and allows clients to create their own funds to meet specific requirements. Companies can design receivables investment funds, which are securitization structures similar to asset-backed securities. At the end of last year, BRAM had assets under management of more than $130 billion.
Best Manager Based In Frontier Markets | Stanlib
Stanlib, owned by South Africa’s Liberty Holdings, was formed in 2002, when Liberty Life and Standard Bank’s asset-management businesses merged. Stanlib oversees assets for corporate clients in a wide range of industries. With a presence in 10 African countries, Stanlib offers active, passive and multimanager strategies across all asset classes. It aims to create attractive risk-adjusted returns by adjusting exposure to each asset class, depending on the economic outlook. Stanlib also has pan-African listed-equity and fixed-income portfolios. Assets under management across the Liberty group totaled $55 billion at the end of 2014.
Best Manager of Onshore RMB Assets | BOCHK Asset Management
A long-term player in China, BOCHK offers several classes of a China All Weather CNY Equity Fund. To differentiate its equity products, the firm launched a joint China All Weather CNY—a sub-fund of risks relating to China—and Hong Kong Equity Fund. BOCHK created the funds to service corporate investors in both China and Hong Kong seeking to take advantage of the onset of Shanghai-Hong Kong Stock Connect. BOCHK is a designated bank of China Securities Depository and Clearing for Hong Kong Securities Clearing, as well as the designated settlement bank of HKSCC for Northbound Trading. BOCHK is a popular choice for corporates looking for stability and sustainable growth.
Best Manager of Offshore Renminbi Assets | HSBC Global Asset Management
Offshore renminbi (RMB) bonds delivered lackluster returns for the first quarter of 2015. But with China’s A share market plunging, investment-grade offshore bonds began yielding 5%. Indeed, offshore renminbi bonds are generally considered one of the best fixed income investments globally—and HSBC Global Asset Management is one of the biggest managers of RMB offshore funds for corporate and retail investors. The firm’s true distinction is its in-house research capability as well as its long-standing experience in both onshore and offshore fixed income investments. HSBC is also a major underwriter of ‘dim sum’ bonds—RMB-denominated bonds issued offshore.
Best Islamic Manager | CIMB-Principal Islamic Asset Management
A joint venture of Malaysia’s CIMB financial group and Principal Global Investors, CIMB-Principal Islamic offers shariah-compliant investment solutions that are socially responsible and fiscally conservative. The firm had assets under management of $1.9 billion at the end of last year. It is part of the Malaysian International Islamic Finance Center and is one of the country’s first global Islamic asset managers. It focuses on global sukuk [Islamic bonds], global and regional equities and global emerging markets, as well as the Asia-Pacific region excluding Japan.
Best Analytics/Reporting | Deutsche Asset & Wealth Management
Deutsche Asset & Wealth Management gets plaudits for its technology, safety and security, as well as its efforts to boost transparency in the industry. Its client-focused approach can be seen in the sophisticated analytics and monitoring tools the firm has developed. Those tools help the firm better serve corporate clients. With a global platform offering full-service capabilities—and with access to the parent group’s full resources—Deutsche AWM is able to effectively respond to risks and opportunities.
REGIONAL WINNERS
North America | State Street Global Advisors
With assets under management of $2.4 trillion, State Street Global Advisors has about $418 billion in money market funds and short-term fixed income strategies. The investment management arm of Boston-based State Street, SSGA assists corporate treasurers in finding the right investments to suit their needs, in terms of liquidity, transparency and capital preservation. State Street established its first Canadian office in Toronto in 1990 and now has approximately 1,100 employees across the country.
Western Europe | Amundi Asset Management
Amundi Asset Management has become a force in Europe since it was launched by Société Générale and Crédit Agricole in a joint venture in 2009. The firm, with more than $1 trillion in assets under management, raked in $50 billion in new net inflows in the first half of the year. Amundi’s innovative and varied investment offerings—notably ETFs and index funds—have so far attracted more than 2,000 corporate clients. The firm is slated to go public in an IPO set for this year.
Nordic Region | Danske Capital
Danske Capital has its roots squarely planted in Northern Europe. It is the international asset management division of Danske Bank, the largest bank in that country. Several years ago, Danske Capital expanded its reach beyond the Nordic countries, setting up in Estonia, Latvie and Lithuania. The firm’s actively managed asset allocation product is aimed at minimizing risk while delivering solid returns for institutional and corporate investors. Danske Capital currently manages more than $109 billion in assets.
Central & Eastern Europe | Pioneer Investments
Pioneer operates regional investment centers in both Warsaw and Vienna. The firm is regarded as a leading asset manager in the CEE region. Pioneer offers a diverse range of products across both traditional and nontraditional asset classes. Banco Santander and private equity firms Warburg Pincus and General Atlantic reached a preliminary agreement in April to merge Santander Asset Management and Pioneer Investments to create a global asset manager with about $388 billion in assets under management.
Latin America | Itaú Asset Management
With $153 billion in assets under management (AUM), Itaú Asset Management is an industry leader in Latin America. The firm’s offerings are split into three strategies: indexed, active and alternative. Itaú’s risk management capability—be it market, counterparty, credit or operational—is a major draw for international and domestic corporate clients. So, too, is the firm’s deep knowledge of the region. The firm maintains a sustainability policy that is applied in its investment analysis.
Asia-Pacific | Eastspring Investments
Eastspring Investments, the Asian asset management arm of UK-based insurer Prudential, boasts $128 billion in AUM. The Singapore-based firm has more than 250 investment professionals in 10 major Asian markets. That gives Eastspring superior local knowledge. At the same time, the asset manager has access to the global resources of its parent.
Middle East | HSBC Global Asset Management
Dubai is the center of HSBC Global Asset Management’s operations in the Middle East, where HSBC is the most widely represented international banking organization. With $447 billion of assets under management, HSBC Global Asset Management offers discretionary products, offshore funds, structured products and Islamic investments.
Africa | Investec Asset Management
Investec Asset Management started as small firm in South Africa but has grown to become an international operation managing more than $120 billion. It provides investment strategies for global, emerging and frontier markets across a number of asset classes, including equity, fixed income and alternatives.
