Serge Weyland, CEO of Edmond de Rothschild Asset Management Luxembourg, in a portrait taken earlier this year by Mike Zenari
Fund managers with between €1bn to €10bn assets under management are sufficiently large to need expert help with their front, middle and back office work, but are often below the radar of the big portfolio management services outsourcing firms. Edmond de Rothschild Asset Management Luxembourg is seeking to fill this gap. Delano spoke to their CEO Serge Weyland.
After having developed Ucits and AIF portfolio and distribution management tools for its own use, the Edmond de Rothschild group saw that it could make this infrastructure available to relatively small third parties. The group has been offering institutional and fund services activities since 1988, and now this “Extended Outsourcing Services” offering is designed for small and medium sized asset managers seeking to control costs, focus on core business, and developing distribution networks. The group had €156bn in assets under management, 2,600 employees and 27 sites worldwide at the end of last year. It is also active in corporate finance, private equity and fund services.
“When launching this service we were thinking of the manager sitting in London, Paris, Frankfurt with a few billion under management,” said Weyland. “They often have complex, active strategies using sophisticated instruments such as derivatives, but they are seeking to keep track of this with a series of spreadsheets,” he added. Already these investments are complex and risky, but to this they are adding the potential for operational foul-ups. Designing, building and testing one’s own IT system are specialist projects in their own right, carrying their own unique risks.
These ad hoc data management tools have become permanent. Not only are they potentially unstable, but they lack flexibility when seeking to add value. “For example, our system allows managers to stress-test their portfolios in reaction to a simulated market event,” Weyland commented. As well, having data in a coordinated, standardised format allows for the application of advanced risk management techniques, running regulatory compliance checks, the application of environmental, social and governance filters, know-you-customer screening, and more. Digital transformation and related artificial intelligence depend on having coherent data to be effective.
The offering extends into the front office, including options for third party use of customer relationship management systems. This can feature value-adding services such as order marking and trailer fee management. “Again this is us making available our tried and tested system to others, including the option of customising processes to their needs,” Weyland said. This is all part of offering a comprehensive, out-of-the-box service.
Weyland stated: “Thanks to this new value proposition, we can offer unique solutions across the entire value chain. We have repositioned our service offering in order to capture an under-serviced market. By using our two new service offerings EOS Portfolio Management and Distribution Management, asset managers can devote themselves entirely to their core business, portfolio management and the search of alpha as well as the development of their distribution networks”.