Europe has had a rough ride this year. Concerns over China
triggered a sell-off that dampened January and February. By
midyear more local concerns — like Brexit, slow
growth, negative interest rates, and quantitative easing
— made it hard for investors to find much solace in
But there have been pockets of opportunity. The firms that
lead the Euro 100, Institutional
Investor’s exclusive ranking of the
region’s biggest investment firms, say being
nimble and open to new ways of thinking about asset management
have paid off.
Allianz Group, which tops the list for the third straight
year, with some €1.83 trillion ($1.98 trillion) in assets
under management as of June 30, posted a 37 percent rise in
profit for the third quarter despite sluggish European
conditions. The firm also reported net inflows to its U.S. fund
manager, Pacific Investment Management Co., for the first time
in three years.
Allianz chief executive Oliver Baete, who took over last
year, has made a concerted effort to sell off noncore
businesses and invest in technology to save money and improve
the firm’s capabilities. He also oversaw the
appointment of a new CEO at PIMCO, Emmanuel Roman, stemming a
tide of redemptions that had been steady since 2013.
On the investment side, Allianz is looking ahead to 2017 by
adding exposures to alternatives — specifically,
infrastructure equity and debt in developed markets, as well as
retail and commercial mortgage loans, wind and solar farms, and
real estate. Next year "will be driven by a slightly more
benign environment — if protectionism can be avoided,"
says CIO Andreas Gruber. "Moderate growth is a perfect scenario
for equities and other real assets."
UBS, holding steady at No. 4 with about €1.02 trillion
in assets, has also seen recent strength in its performance as
a result of balance sheet optimization. Profits were up some 33
percent for the third quarter, and thanks to the recent rally
in banking stocks, the Swiss bank had its best day since 2011
during the post–U.S. election rally on November 10.
UBS gained just under 8 percent in that one day, ending the
week at $15.80.
"When you look at this environment with all of these events,
investors look to us as a guide for information to help them
make good decisions and preserve wealth. We’ve
been able to do that successfully this year," says Themis
Themistocleous, head of UBS Wealth Management’s
European investment office. "The investors that made the most
money this year were heavily globally diversified and willing
to consider a range of investments."
Given such surprises this year as the outcomes of the Brexit
vote and the U.S. presidential election, Themistocleous says
investors need to stay vigilant and be willing to take another
look at their portfolios, examining what works and what
"I think one of the big questions going forward is how
monetary policy will play out in the next year," he adds. "We
are underweight high-grade bonds as a result of this, for
example, but you can make up for that in other areas of fixed
income and equities."
Other firms in the ranking have been up-and-comers. This is
the second year that BNY Mellon has climbed the list, moving to
No. 6 from eighth place on the strength of €795 billion in
assets. Jamie Lewin, head of product strategy and performance
management at BNY Mellon Investment Management, agrees with
Themistocleous that being proactive and opportunistic are key
investment themes in the euro zone right now.
"We’ve really seen three core trends this
year," Lewin says, "the first being pension plans and other
institutions going to a liability-driven investing model in
terms of how they allocate. We’ve also seen
significant growth in the multiasset absolute-return space and,
finally, a greater interest in specialist investing." Within
multiasset and specialist investing, BNY Mellon has two
separate boutiques focused on each area, allowing for a more
Lewin says there’s a disintermediation going on
in asset management and banking in Europe that makes it tough
for less dynamic firms. "We see our model as being responsive
through the combination of specialist active management, LDI,
and beta. If we can continue to execute on those things, we
will be successful."