Swiss private bank Julius Baer has reduced the number of BlackRock products it offers following its acquisition of Merrill Lynch's non-US wealth business. The driver behind the move is that the US fund house had gained a dominant share of Julius Baer's shelf space as a result of the Merrill Lynch deal.
BlackRock had also provided a very substantial share of the range of funds sold by Merrill Lynch International Wealth Management (IWM). The close relationship between the two firms had dated back to 2006, when BlackRock acquired Merrill Lynch Investment Managers.
As a result of Julius Baer's purchase of Merrill Lynch IWM, which was announced in August 2012, BlackRock’s product foothold strengthened yet further. The Swiss bank had already had the manager's funds on the platform before the acquisition.
As part of the integration – expected to be completed next year – the team headed by Zurich-based Andreas Feller, global head of investment solutions at Julius Baer, has been educating former Merrill bankers on the open-architecture platform of the Swiss bank.
He declined to reveal what share of Julius Baer’s client assets are now managed by BlackRock, but said the fund house has a smaller concentration of products sold through the Swiss bank than it did at Merrill.
The acquisition did not affect any fund specialists or due-diligence staff in Asia or London, noted Feller. They are now part of the investment solutions team he heads or in the fund solutions unit, which is responsible for conducting due diligence on products.
Julius Baer operates an entirely open-architecture platform, having sold its funds business to Swiss & Global Asset Management in 2009. The private bank has 400 approved funds, which are used to build portfolios for both its advisory and discretionary clients.
Feller said the discretionary business is growing, but the amount of discretionary assets in Asia is still lower than that in Europe. However, the penetration rate in Asia is improving, he added, declining to provide any figures.
“We have more interests in discretionary solutions, especially because more family offices are being set up in Asia,” noted Feller. “They have higher interest in discretionary solutions, and we see growth happening.”
However, Julius Baer's fee-based advisory offering is its fastest growing globally. Started in 2006 with SFr1 billion ($1.03 billion) in assets under management, the business has grown to SFr34 billion.
Feller said the fee-based advisory segment will continue to grow, driven by the growing speed and volume of market information and regulatory changes. This has made it more challenging for investors to keep up when it comes to managing their portfolios, he noted.
During the first 10 months of 2014, integration-related activities resulted in a net 318 employees leaving the group, up from 265 at the half-year stage and close to the full-year target of 400.
Julius Baer employed 5,557 staff as of June 30, 2014. At the end of October this year, the group’s AUM amounted to SFr285 billion, an increase of SFr 31 billion, or 12%, since the end of 2013.