Much sighing and watery-eyes accompanies talk about Schroders' disappearance into the maws of the mi...
Much sighing and watery-eyes accompanies talk about Schroders' disappearance into the maws of the mighty SalomonSmith Barney - the last great British independent institution falls etc. etc. - as though it were a hero of Custer's last stand. Strikes me it bailed out just in time. If Mercury Asset Management, a jewel of comparable lustre, took Uncle Sam's shilling, it's a pretty clear pointer that a link to a US house is less a sell-out, than a join-up.
Of course, this is not the first, and it will certainly not be the last, US incursion into the European investment management industry. It has suited the US behemoths to start in London because we all speak sort of the same language and the 'special relationship' could be translated into a certain 'goodwill consideration' when the spoils were being divided up over the splendid dinner with Citigroup executives at Win Bischoff's house a couple of weeks ago.
In the last five years, the US bull market at home has provided the sort of comfortable margin which allows ambitious investment houses leeway to explore abroad. Thus Fidelity has ensconced itself carefully in the UK, ready for the second wave of attack on Europe. Frank Russell linked up with Société Générale, Putnam with Italy's Grupo Bipop, Mellon Bank went for Newton, Morgan Stanley Dean Witter picked up AB Aseores in Spain, among many others.
In the race to build a brand name in Europe, Dublin has allowed US managers to make a fast run up on the outside. In 1998, of 19 new asset managers setting up in the fiscally-favoured IFSC, seven were from the US, and they already account for 60% of all assets registered in Dublin. Funds under management by US groups surged that year by over 50% to $15.6bn. The growth trend has continued through 1999.
True, it has not all been plain sailing - the record shows that as soon as commitment from the home base wavers, the attack on Fortress Europe tends to disintegrate. Remember that when the Dow starts heading south. And Europe's leading lights such as UBS, Credit Suisse and Germany's Deutsche Bank are not about to hand over what everyone now knows is an oven-ready market to finger-lickin' US competitors.
Ordinary punters have little chance of influencing the outcome as the titans clash. They just have to endure the noise, heat and dust, and hope that when it all settles, a better order will ensue. This, happily, is not a vain hope, because there are many aspects of US investment practice which would benefit institutional and retail players alike.
US product providers cannot claim to have invented the use of technology for customer profiling or the concepts of corporate governance and shareholder value, but they seem a little more dedicated to them than many of their local counterparts. Firms like Fidelity and Vanguard bring in state of the art systems to service and sell. Once clients get used to that, the bumblings of paper-based records, in-a-meeting managers and lost-in-the-post communications merely irritate them.
Some of the raver-flavours of recent years have filtered across from the US: high yield bonds and index tracker funds spring to mind. US groups boldly point out, to both institutions and private investors, that they can legitimately ditch poorly performing funds. The area of fees and charges is long overdue a bloody revolution. So weep not for the passing of Schroders; far from dying, Bischoff's just gone to get a mission statement from a higher place. He'll be back.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress