Innovation provides flexibility to third party manager model
Aberdeen Asset Management Asia (‘Aberdeen’) has launched a sub-advisory mandate for Bank of Montreal (‘BMO’) clients in Asia. It is the first such agreement with a private bank for Aberdeen.
Aberdeen will manage an Asia ex-Japan mandate for BMO’s Asian clients. The selection of this mandate reflects the Group’s long tenure in the asset class, over which time it has built up a reputation under equity head Hugh Young for its research-led, buy-and-hold style. At present it has 45 equity managers in five regional locations excluding its headquarters in Singapore.
According to Aberdeen the arrangement works for both sides. Aberdeen benefits from partnering with a well-respected private bank and is able to expand its distribution network to include BMO’s Asian clients. BMO in turn benefits from Aberdeen’s asset class expertise, while retaining full discretion over its client portfolios.
Aberdeen and BMO have been working on the arrangement for some months, facilitated by due diligence via an Aberdeen Group office in Toronto, BMO’s hometown.
Aberdeen itself has been on the ground in Asia for over 20 years and has had dedicated private bank channel coverage for the past eight years.
Amelie Remond, Head of Private Bank Distribution at Aberdeen Asset Management, comments:
“The use of third party funds potentially dilutes the client proposition for banks who aim to give a full discretionary service and also requires a big permanent structure in terms of product gatekeeper overhead. For private banks we think sub-advisory has merit as a genuine solution. The bankers retain full discretion over their client portfolios while we expand our distribution and branding to a new group of clients. As the industry matures, it’s a model other private banks might want to consider.
Edmund Yun, Head of Investment at BMO Private Bank Asia adds:
“We provide our clients a wide range of discretionary investment solutions that meet their investment needs and objectives. Our investment platform, which operates on an open architecture, gives us that flexibility to select investment managers and the applicable investment mandates.”
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