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Schroders Restructures in Pursuit of U.S. Clients

U.K. asset manager is staffing up and considering acquisitions and lift-outs to grow North American revenue.

Schroders has restructured its distribution and product development teams, Institutional Investor has learned. The shake-up — which includes new hires and plans for acquisitions and lift-outs — aims to grow the firm’s U.S. and Canadian business, which now represents about 12 percent of revenue and assets. 

“I was brought on to evaluate where we are and where we are not,” said Marc Brookman, deputy CEO of Schroders North America, in an interview. Schroders’ biggest markets are the U.K., Continental Europe, and Asia, but it operates from 29 countries. Brookman joined Schroders in July from Morgan Stanley, where he led products and sales for Institutional Wealth Services, including Graystone Consulting.

Schroders expects North America to represent 20 percent of its revenue and assets in three to five years.

Brookman has hired specialists in endowments and foundations, defined contribution plans, and subadvisory and insurance.

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Institutional clients make up the majority of Schroders’ U.S. business, but it has not been a meaningful player in the endowment and foundation market. The firm will likely make acquisitions and lift-outs to help break into nonprofits, as well as other target markets, Brookman said.

“Endowments and foundations have 50 percent of their portfolios in alternatives, so we’ll need to be bigger in alts,” said Brookman.

Last month, Schroders hired Joel Schiffman from Janus Henderson Investors to head sales in U.S. defined contribution, insurance, subadvisory markets. Brookman said the firm will create products for these markets, customizing many of its existing strategies. For example, the firm has a successful environmental, social, and governance-oriented business in Europe, liability-driven investing expertise, and securitized credit products.

Schroders inked a deal with Hartford Funds Management Company in 2016, and has been subadvising defined contribution products for more than two years. Brookman said that’s a start, but it will work to get on more platforms. The partnership with Hartford will focus on the smaller end of the DC market mainly through advisors with their funds. Schroders will focus on the larger end of the market through consultants and directly to plan sponsors. Brookman is also hoping Schroders can get in early on the trend of sponsors overhauling their DC plans to resemble their defined benefit portfolios, which tend to outperform at lower risk and fee levels.

“Target date funds will be a blend of passive and active, will include more ESG strategies, and more liquid alternatives,” explained Brookman. 

The firm is also interested in possibly acquiring quarterly interval funds — both private equity and private credit. The increasingly popular interval funds provide some liquidity and are aimed at high-net-worth investors.

Other new hires include Brad Angle, who joined from Apollo as a director in alternatives focused on private assets, and James MacKendree, formerly of the Palisades Group. MacKendree is part of the new endowments and foundations team.

Schroders has its eye out for entire investment team and companies, as well. “There are some unique properties out there,” Brookman said. “We don’t have a CIO that sits on top of every team.  We get many views of the world that way.”

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