In a clear indicator of the rising investment flows between west and east, Eastspring Investments has set up a presence in the US across two offices. These are the firm's first outside Asia and the second in as many months after the opening of an Indonesia branch in May.
The recently rebranded asset management arm of Prudential Corporation Asia will focus on institutions such as endowments, foundations, pension plans, large family offices and, to a lesser extent, insurance firms. It also plans to build relationships with investment consultants such as Cambridge Associates, Hewitt Associates, Mercer and Towers Watson.
“And if there is money to come from sovereign wealth funds in, say, Canada, we are happy to speak to them,” says Dean Winterton, Eastspring’s head of institutional business, who joined in September in Singapore.
Jeffrey Smith has come on board as head of the Americas and is joined by Pamela Aurbach, senior vice-president of institutional sales. Both started on June 1 and report to Winterton. The new starters are spending an initial couple of weeks in Asia and will be back in the US from June 18.
The US investment management market is the largest in the world, at $35 trillion, of which pensions account for $16 trillion. Combine that with the fact that most sophisticated institutions there have a “relatively modest” allocation to Asia, and there’s clearly huge potential to tap, notes Winterton.
Smith (pictured left) is based in Chicago and is tasked with building the institutional business and ultimately expanding further into the Americas, with support from Aurbach. The reason for the split is that Chicago is a strong hub for covering North America, while Aurbach joined from Prudential sister company Jackson National Life Distributors, which is based in Denver, Colorado.
With 30 years of financial services experience, Smith was most recently head of distribution at Performance Trust Investment Advisors and before that US head of distribution at Pyramis Global Advisors, part of Fidelity Investments. He has also been co-head of institutional business for the Americas at UBS Global Asset Management.
At Jackson Life, Aurbach (pictured left) had assessed new product offerings, geographies and distribution channels. She had also been seconded to Prudential UK as head of business development services in the intermediary sales division.
With operations across 12 Asia markets, Eastspring has $85 billion in AUM, a figure it will hope to increase with inflows from North America.
It will start by offering segregated mandates and sub-advisory services, says Winterton. “Mutual funds are probably a step too far right now.” Selling to retail or private banks would involve gaining approval for new product structures that are compliant with US law, he points out.
As for asset classes, Eastspring will aim to sell Asian equities, fixed income and real estate into North America. Winteron expects to see demand for products offering exposure to emerging-market equities, Asian fixed income and property, especially given the potential for the higher yields they offer. “These asset classes make a lot of sense for pension plan sponsors,” he adds.
The US is the primary focus, but further expansion is likely down the line, such as into Central and South America, and ultimately Europe. There are quite a number of pension fund systems in Latin America, notes Winterton, such as “the Andean three – Chile, Peru and Colombia – which all have relatively similar accumulated pension schemes and lend themselves well to the type of market we are trying to tap”. Eastspring has no clients in South America at present.
Smith and Aurbach will be supported by four US-based administration and operations support staff (covering areas such as IT), and further hires are likely to be made as and when client demand requires. Much of the operational risk and compliance will also be covered by staff in Singapore for the time being.