This document is solely for the use of professionals and is not for general public distribution. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Global Distribution Strategy
May 2014
Investor presentation
Phil Wagstaff Global Head of Distribution Today
• 5 year plan
• Changes made and changes ongoing
• People
• Our global business
• The importance of product
• Brand
• The next 3 years
1 My background
• Over 25 years in asset management distribution
• NM Schroder, Henderson, M&G Investments, New Star, Gartmore
• ‘Done the job’
• Build the people and they will build your business
• Joined via Gartmore acquisition
• Why I came back!
2 A combination of art and science
Competitive advantage
Right client service
Right brand
Right performance
Right products
Right time
Right relationships
Right people Distribution is a combination of art and science; application of science to the art of relationships
3 Distribution strategy
The 5 year plan
• Performance, and the perception of performance, is critical to long term success
• Global Product Development is a key driver
• We need a brand that conveys the sense of performance
•A distribution structure based around client types gives a better understanding of investment objectives, product and service needs
• Quality of people will determine the quality of success
• Team work and collaboration critical in a global market
• Need to build our core franchises
• We have to back our winners
2 years in, 3 to go
4 Global Institutional net flows
Institutional flows continue to stabilise
197 113 £m
(107)
(423) (581) (747) (708) (833)
(1,457) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
5 Global Retail net flows
…whilst turn around in Retail is evident
2,875 2,504
1,348
399 188 £m
(110) (46) (296)
(792) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
6 Onshore OEIC / Unit Trust Retail net flows
Re-establishing our market position
690 646
473
154 £m
(159)
(367) (337) (376) (399)
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
7 Offshore SICAV Retail net flows
Record Q1 2014 built off strong performance
1,554
1,114
480 470 307 246 108 £m (36)
(252) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
8 US Mutuals Retail net flows
Robust Retail flows continuing in 2014
608 609
398
187
97 £m 5
(25) (16)
(164)
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
9 Global Retail net flows
2,875 2,504
1,348
399 188 £m
(110) (46) (296)
(792) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
10 Diversity of flows by fund, strategy and geography
20 Retail funds in FY13 with net flows of £100m+
European Equities
Global Equities £2,394m Global Fixed Income
Multi-Asset 712 Alternatives £1,491m 73 135
400 410 £917m 67 £857m 68 100 27 356 173 302 190 1,064 419 18 600 251 198 96 1Q13 2Q13 3Q13 4Q13
1Q14 continued this momentum: 10 Retail funds with net inflows of £100m+
11 What is Distribution?
25% of Henderson’s staff work in Distribution which sits at the centre of the business
• Sales Pre-financial crisis model
Clients • Marketing communications
Portfolio Portfolio Sales Relationship Operations • Investment communications Managers Specialists Managers
Loose coordination • Client service
• Product strategy / development Emerging model
Clients • Brand
Portfolio Portfolio Relationship Sales Operations Managers Specialists Managers
Tight coordination
Source: KPMG – Evolving Distribution Models in Asset Management.
12 What have we been doing?
Working as a team to help us better serve our clients
Changed… Old model • Our model • Our behaviour Institutional • Compensation • Building a global infrastructure Retail Liquid Alternatives Focus… • Increasing and up skilling resources New model in core markets • Rebranding the business • Globalising the product suite Institutional • Increasing marketing spend Liquid Retail • Identifying key franchises and ‘run our winners’ Alternatives • Centres of excellence
13 Developing a truly global distribution model
Distribution
UK 151 FTEs North America 66% 11% AUM¹ AUM¹ Europe and Distribution Latin America 39 FTEs 19% AUM¹,² Distribution 31 FTEs
Asia / Australia 4% AUM¹
Distribution 23 FTEs
Note: All data as at 31 Dec 2013. 1 Based on total AUM. 2 Includes Middle East and Africa.
14 New people
Head of EMEA Head of EMEA Head of Global Head of Head of Retail & LatAm Institutional Marketing Advisory Sales Distribution Australia Greg Jones Nick Adams Rob Page Sam Mettrick Matt Gaden
CEO of Japan Head of Asia Head of Head of Head of Corporate Business Wholesale Germany Content Communications Shiro Tsubota Mabel Chan Daniela Brogt Darrel Billingham Angela Warburton …and more to come
15 Europe & Latin America
Depth and breadth in distribution supported by a strong brand presence
London, Paris, Milan, Amsterdam, Frankfurt, Zurich, Madrid base
EMEA Investment Continental UK Retail¹ Latin America Institutional² Trusts Europe Retail
Sales 13 8 3 2 17 Professionals
Private investors, Local authority Private investors, National pension Platforms, banks, financial advisers, pension funds, financial advisers, funds (AFPs), insurance platforms, corporate pension platforms, banks, companies, Clients discretionary funds, institutions, discretionary discretionary discretionary wealth managers SWFs wealth managers wealth managers wealth managers
UK Property, Sterling Credit, The City of London Absolute Return, European Equities, Cautious Managed, Total Return Bond, Investment Trust, European Equities, European Credit, Strategic Bond, Multi Asset Credit Bankers European Equities long/short, Key Products European Special Investment Trust long/short Global Equity Sits, Global Equity Income Income
Note: Clients from the EMEA region are serviced either directly from London or through one of our European offices. 1 Teams: UK Discretionary team, UK Advisory team, JV team (Telesales team 2Q14). 2 Teams: UK Client & Consultant Relationships, Nordics & Netherlands Sales teams.
16 North America
Strong Retail Distribution network
Boston and Chicago base
US Retail US Institutional
Sales 18 3 Professionals
State pension funds, Clients Wire houses, wholesale platforms, RIA’s corporate pension funds institutions
Global Equity Income, European Focus, Global Equity, Global Fixed Income Key Products International Opportunities
Note: Background reflects current Henderson US distribution territories.
17 Liquid alternatives distribution
London and US base
Sales Professionals 6 (3 EU, 3 US)
High net worth individuals, family offices, private banks, wealth managers; Clients Local authority pension funds, corporate pension funds, institutions, SWFs; Charities and foundations
Key Products UK Equity long/short, European Equity long/short, Agriculture, Global Equity long/short, UK Small Cap long/short
18 Global product governance framework
Global Strategic • Strategic – high-level / long-term Product Group • Product innovation • Life cycle review
Product Implementation • Execute new product ideas Committee • Coordinate and prioritise initiatives
Product and projects • Product specification stakeholder • Stress testing meetings • Pipeline reporting
19 Global product development
Strategic / Global Tactical / Regional
1. Global Equity 1. Asian Equity • EAFE & ACWI 2. Natural Resources 2. Global Equity Income 3. Agriculture 3. Global Fixed Income • High Yield 4. Liquidity • Investment Grade • Emerging Market Debt 5. Commodities
4. Unconstrained Bond Funds
5. Global Equity Long Short
20 The winner takes it all
Global flows 2013¹ US mutual flows – Europe stock² $bn $m 1,500 1,317 3,000 2,739 Top 2 funds 2,500 1,000 2,000 500 1,500 1,000 738 738 707 0 500 -500 0 (564) Top 5 Remaining 22 JP Morgan Henderson -1,000 funds Intrepid European European Focus Top 1% Remaining 99% Fd Fund
European flows – European ex-UK large-cap equity³ UK Retail flows – IMA Property4 €m £m 4,000 2,947 Top 5 funds 3,000 3,000 2,511 2,500 2,000 1,279 615 1,000 564 396 334 322 2,000 0 1,500 Top selling fund in sector 2013 1,000 569 500 Dynamic BGF European Fund funds BlackRock Flexible Top 5 funds Eur Select Henderson Standard Life Eur Eq Inc Fd Threadneedle Cont Europe Cont 0 Remaining 149 Gartmore Fund Continental Eur Continental Henderson UK Property Total sector
¹ Source: Morningstar Direct, Worldwide OE & MM ex FoF ex Feeder Database, as at Dec 2013. ² Source: Morningstar Direct, US OE ex MM ex FoF Database, as at Dec 2013. ³ Source: Morningstar Direct, Europe OE & MM ex FoF ex Feeder Database, as at Dec 2013. 4 Source: IMA EchoWeb, as at Dec 2013.
21 Henderson Horizon Euro Corporate Bond Fund
December 2010 Henderson Horizon Euro Corporate Bond Fund since inception The first anniversary of the fund marks the beginning of marketing 2.0 € Henderson Hz Euro Corp Bd Fd 40 activities supporting sales efforts to establish Henderson’s reputation as a FI fund manager. 1.8 € Henderson Hz Euro Corp Bd Fd Performance 35 1.6 € 30 1.4 € 2011 – 2013 1.2 € 25 With client interest in Credit remaining high, marketing activity 1.0 € 20 focused heavily on: 0.8 € 15 • Sponsored events: 12 events across Europe, including high 0.6 € profile pan-European events 10 0.4 € • Major PR focus principally in France, Germany and Italy • Webcasts (on average every trimester), supported by transcripts 0.2 € 5 • Frequent webinars on topical issues 0.0 € 0 • Frequent collateral, such as ‘Fund updates’ and ‘View from the Credit desk’ Jun-13 Jun-12 Jun-11 Jun-10 Mar-13 Mar-12 Mar-11 Mar-10 Sep-13 Dec-13 Sep-12 Dec-12 Sep-11 Dec-11 Sep-10 Dec-10 Dec-09 • Exact target from September 2011 Higher level of marketing activity coincides with rising flows into the • Second best performing fund in the sector since fund. inception • Second best net selling fund in the sector in the past 2 years 2014 • 1.68% market share in the Morningstar Marketing activities on this fund scaled back to make use of limited EUR Corporate Bond sector fund managers’ time on promotion of EHY and GHY fund.
Source: Morningstar Direct, comparison with the Morningstar Fixed Income Euro-Corporate Universe, Lux domiciled funds only.
22 Strengthening our brand
Marketing is not brand Jonathan Ive 1. Having the right product, for the right “Chief Designer, Apple client in each region is fundamental Your sense of a brand is really a sense of the to building a brand product. I’ve never understood how people can think that you can describe what you 2. Consistent performance in flagship want the brand to be and then sort of products has to be a given legislate that in a way that’s not entirely driven by the product.” 3. Culture where all staff build the brand by reflecting a positive image of Henderson
A believable external message can only be developed once we have confidence in delivering the above three.
23 Rebrand
Why? Objectives
• Sophisticated, upmarket • A fresh start for Henderson
• Non retail leverage • A line in the sand post M&A
• Non UK leverage • Establish our credentials around our core competencies • More coherent and consistent • Position Henderson as an intelligent, • New websites sophisticated and aspirational brand
• Positioned for todays clients – the buying process is institutionalised
• Allow us to engage with our audience through the various routes to market and establish
24 Our competitive advantage
• RDR means that existing brands are more • Well established sub-brand AlphaGen desirable • Operational expertise • High barriers to entry for guided architecture • Cultural advantage over traditional asset • Strong fit of product to market demand managers
UK Retail Liquid Alternatives
• Existing relationships with wirehouses and • Established network of local offices, local platforms languages and support to build on • High barriers to entry • Strong fit of product to market demand
US Retail Continental Europe
25 Global Distribution Strategy – Focus on Asia
Rob Adams Executive Chairman, Asia Pacific Why Asia?
Pan Asia should become a growth engine for Henderson • Asian Century is upon us – by 2030 Asian GDP will be greater than 35% of global GDP¹
• Asia will comprise 22% of global investment management revenues over the next 5 years (US$385 billion)2
• Sovereign funds, large Japanese pensions and Australian superannuation shape the Asian institutional opportunity
• Henderson has a good foot-print in key markets, but needs to build strong “franchise” capabilities
• Focus will be critical… • Asia’s top 50 asset owners represent 90% of the institutional revenue opportunity • Australia will drive the DC market • Japan will drive the retail sub-advisory market (local partnership opportunity) • China could become a major growth engine (local partnership opportunity)
¹ Source: ANZ – “The Caged Tiger – the Transformation of the Asian Financial System” , March 2014
2 Source: Casey Quirk. 27 Asia’s heterogeneous marketplaces force firms to make concentrated bets
Henderson Market dynamics Competitive dynamics Success factors focus
• Most local players abandoning global • Deteriorating corporate pension funding •High‐yielding, credit‐oriented products product • Lack of domestic income‐generating • Sub-advisory relationships with key • Local distributors seek foreign brand names instruments providers and local distributors for thematic offers
• Differentiated global equity and • Substantial fee pressure from regulators • Oversupply in Australian equities alternatives • Growing need to diversify domestic‐heavy • Greater need to move toward passive and • Access to higher‐fee market segments portfolios overseas alternative mandates in superannuation such as SMSF, HNW
• Chinese players linking HK, mainland • MPF fee pressure reduces growth • Local products and structures vendors • Local HNW marketplace increasingly • Strong mainland‐oriented partners • More unified “Greater China” market will RMB‐denominated • Range of global strategies create more intense local competition
• Regulators opening new pools of assets • Highly concentrated distribution • Strong JV partner… Greater • Global product demand slowly rising as • Regulatory arbitrage favours “national • …offset with individual firm ties to China government eases curbs champions” insurers, distributors, trusts
• Pension reform poor growth catalyst • Master trust rule changes could impede • Local SITE/SICE infrastructure • Local HNW marketplace sophisticated offshore fund sales • Connections with strongest local FHC • Local structures increasingly favoured • Local competitors to tie up with mainland distributors
• Sovereigns insourcing significantly • Local presence • Strong sovereigns, weak retail demand • Retail favours brand names that play well in • Alternatives, global products for HNW • HNW booking centre for Asian wealth CPFIS investors
• Demand focused on local, regional product • Aggressively globalising local players • Local product development Secondary • Sovereign and pension market growing • Waning interest in cross‐border funds • Bank distributor connections Focus
• Fund flows roiled by regulatory changes • Local players have best distribution links • Ownership in solid local manager • No institutional market on horizon • Slim demand for non‐Indian product • Long‐term strategy for asset accretion
Source: Casey Quirk.
28 Pan Asia
Expanding distribution presence
Singapore, Hong Kong, Sydney, Tokyo base
Greater China Japan Australia Rest of Asia
Sales 2 4 3 6 Professionals
SWFs, platforms, National pension funds, Super funds, Banks, discretionary banks, institutions, institutions, banks, institutions, charities, wealth managers, Clients distribution partnerships distribution partnerships platforms, banks, institutions, financial advisors, private banks SMSFs
Global Equities, Global Equities, Global Equity, Global Equities, Global Fixed Income, Global Fixed Income, Global Fixed Income, Global Fixed Income, Key Products Hedge funds Managed Futures, Enhanced Index, Hedge funds, Hedge funds Global Commodities, Global Property, Global Resources European Equities
29 Blueprint for Pan Asia
Leverage local • Gain better leverage from existing business operations in business Singapore, Tokyo, Hong Kong & Beijing infrastructure • Likely requirement for local product structures • Investigate partnership opportunities to accelerate growth
Introduce key • Strong focus on promoting our global capabilities capabilities to • Re-shape Asian equities under new leadership market • Focus on key institutional relationships
Build brand • Develop a strong institutional brand presence and • Build a diversified book of AUM – global + local capabilities grow AUM • Become a solid contributor to Group
30 Spotlight on Australia
Create local • Local team, full RE license, local transactions business • Approach shows long-term commitment infrastructure • Build on positive brand perception
Introduce key • ‘Import’ rated and relevant capabilities - global capabilities to • Local deals with local and global appeal (‘export’) market • Demonstrate commitment to the market
Build brand • Develop a strong institutional brand presence and • Build a diversified book of AUM – dominated by global capabilities grow AUM • Become a solid contributor to Group
31 Competing in Australia’s crowded market
Early signs support our aspirations
• Pure play active manager, with diversification of offers
• Focus on contemporary global capabilities
• Best quality local team, combining with world-class PMs
• No legacy – a clean sheet and an open mind
• Historical connection with Australia
32 For Pan Asia…
Last 2 years Next 3 years
Build foundation for Australia Build core product franchises across Asia Re-assess Asia strategy Institutionally recognised Produce a plan that sees Asia as a key growth contributor Active partnerships delivering Investigate strategic partnerships in key markets Become a material contributor to the Group Create focus
…back to the global plan…
33 Back to the 5 year plan
Last 2 years Next 3 years
People upgrades/ culture Globalise the product suite Process Institutional development Product development •US • Europe Brand •Asia
Home market strength European and LatAm Retail expansion Retail Japan on stream
Australia on stream
…only the start of the journey
34 Henderson Global Investors 201 Bishopsgate, London EC2M 3AE Tel: 020 7818 1818 Fax: 020 7818 1819
Important information This document is intended solely for the use of professionals, defined as Eligible Counterparties or Professional Clients, and is not for general public distribution.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances orthelaw change.
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Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.
Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing.
Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored. Ref: 34S
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