Barclays’ funds arm to offer execution services in Asia

Barclays’ Funds and Advisory business will this week roll out its Portfolio Solutions service in Asia, having already achieved substantial take-up in Europe and the US.

It allows institutional clients to outsource operations such as execution and risk management, particularly for non-traditional asset classes such as commodities, emerging markets and derivatives.

The UK bank’s asset management arm – formerly Barclays Capital Fund Solutions – has already seen interest from Asian clients it has talked to, says Paul Hopkins, director of Funds and Advisory in Singapore.

The main focus will be on pension funds, but Portfolio Solutions will be available to clients across the board from sovereign wealth funds to private banks, and they can use it without having to buy a fund from Funds and Advisory.

“We have noted for some time that pension managers and trustee boards are looking for new ways to manage their investment portfolios more effectively in a turbulent environment,” says Hopkins.

Many traditional, single-asset-class investments have failed to deliver consistent positive returns over the past decade, explains Hopkins. Investors are looking for additional sources of value across a broader universe, such as commodities, emerging markets and derivatives, he says, as well as the ability to go short and use options to reduce volatility and protect capital.

“Pension funds have started to invest in these non-traditional asset classes,” says Hopkins, “but establishing the capabilities in-house may be challenging.” That requires a combination of investment and trading expertise, a more complex risk management framework, International Swaps and Derivatives Association (Isda) agreements and legal and operational know-how, he notes.

Family offices are also looking at Portfolio Solutions, says Hopkins. A wealth manager, for instance, may want to make an asset-allocation call but have Funds and Advisory do everything else, he says. “Let’s say a private bank cannot achieve sufficient exposure to a difficult market. We can run a fund for them based on their desired allocation – we have more than 80 exchange relationships globally.”

The firm, which has £18.04 billion ($28.7 billion) in AUM, is indifferent as to whether it is servicing a pooled fund or a segregated account. “We have our preferred custodians and administrators,” says Hopkins, but we’ll happily link up with any major custodian in the world.

"Basically it means linking IT platforms, execution capabilities and operational models to allow clients to plug and play as they see fit,” he adds.

Most of the resources are in London, including much of the IT capability, and so much of the product and service will be built out of the head office. But Funds and Advisory has investment professionals and operations specialists across its international offices, such as London, New York, Singapore and Tokyo, so it can offer the new service across the globe.

“We are looking to get traction with pension or sovereign wealth funds that want to upgrade or re-energise their infrastructure,” says Hopkins. “We have a great factory and we want to share it with more people.”

Portfolio Solutions is already being used by Barclays’ clients in other regions, from US pension plans to European private banks.

Established in 2005, Funds and Advisory has a team of more than 100 investment professionals and operations specialists, managing assets globally.