Pyramis Global Advisors, a unit of Fidelity Investments, has opened an office to serve clients and consultants in the Middle East.
The office, based in London, is part of Pyramis' strategy to add assets and diversify revenue sources in Europe and Asia. It plans to open an office in Hong Kong this year to serve clients in Asia.
Kevin Uebelein, the president and chief executive officer of Pyramis, said in an interview last week that the opening of the London office is a key development for Pyramis in terms of its plans for continued growth.
"Last year we established investment research capabilities in London and Hong Kong, including locating six research associates in London and four in Hong Kong," he said. "We also have extensive experience managing strategies for institutional investors outside the U.S. As such, we have seen increasing interest in traditional long-only and low-to-medium-volatility alternative equity strategies, which are areas where we have extensive track records and where we have built additional capabilities to our global investment platform. Additionally, we have found U.S.-based multinational clients and international institutional investors expect their asset managers to service them locally."
Pyramis, which had $113 billion of assets under management as of March 31, hired Ulrik Walther in London as a senior vice president and head of its Europe, Middle East and Asia sovereign institutions business.
Analysts said that many U.S. asset managers have expanded in Europe in the past year. Many of them have focused primarily on the retail market through the launch of funds registered in Dublin or Luxembourg.
Benjamin Poor, a director at Cerulli Associates in Boston, said for those firms, distribution might be dependent on generating leads through advisers' quantitative screens. Others firms have focused on multimanager and subadvisory arrangements, which help expand institutional distribution with relatively light capital commitment. These relationships can be managed from the United States or by a skeleton crew in Europe, Poor said, but some large fund mangers are opening full-scale European offices. Poor said this makes sense for firms that want to focus on institutional distribution.
"Though many of the global investment consultants and multimanagers — or banks, for that matter — have a U.S. presence, it is not simply the case that offices in New York will fully influence distribution in London, Paris or Frankfurt," he said. "Even if simply managing a sleeve of pension assets, it is important for U.S. managers to familiarize themselves with the local regulatory framework, which will impact both operational commitments and the willingness to embrace certain products and strategies."
Uebelein said Pyramis plans to hire sales professionals in Hong Kong. "Beyond that, in the current environment, we will be prudent and deliberate in planning, so at this point I won't speculate on any future plans."
Managing assets for institutional clients outside the United States is not new to Pyramis, Uebelein said; it has offered investment capabilities in cooperation with Fidelity International Ltd. since Pyramis opened in 2005.
Sean Cunniff, an analyst with TowerGroup, an independent research firm owned by MasterCard Inc., said he thinks Pyramis' expansion strategy is the logical next step. He said most of Fidelity's revenue comes from North America, so it makes sense to diversify. "Look at it in terms of investing," he said. "Most prudent investment advisers will recommend a substantial portion of client assets be invested globally for diversification and to reflect the worldwide nature of the economy. Fidelity is doing the same thing with its corporate portfolio."
Pyramis may get business from large European financial firms marred by the financial crisis, Cunniff said.