Julius Baer gatekeeper mulls potential Janus-Henderson impact

Fund distributors are keeping a close eye on what the merger of US-based Janus Capital and the UK’s Henderson Global Investors – unveiled on Monday – will mean for products on their shelves.

While it is positive for the market overall, the deal raises questions over what will happen to the asset managers’ funds, said Luigi Vignola, head of of markets and advisory solutions Asia at Julius Baer. 

The Swiss private bank has some Henderson funds on its platform, and their future will depend on how they are dealt with post-merger, he noted. The question is whether the new entity continues to run them in the same way or reissues new funds.

“We will assess how the merger goes, if they combine their funds or if there’s a corporate action on the funds,” Vignola said.

Changes at a fund house are always a concern, he added, but it is simply a question of continued monitoring of the products on the bank’s platform.   

But while it has implications for distributors, ultimately the Janus-Henderson merger is likely to have more of an impact on the two firms’ institutional clients, argued Keith Pogson, senior partner in the Asia-Pacific financial services division at consultancy EY.

In any M&A there will be fallout, he noted, but in the case of Janus and Henderson he doesn’t expect to see much of an impact on the retail business.

But there may be implications for large asset owners, said Pogson. Pension funds, for instance, are subject to concentration limits, in that they are not allowed to have more than 10% of their assets invested with one manager.

More competition coming

Overall, Vignola views the merger of Janus and Henderson as good for the two firms and for the industry as a whole. “The motivation behind the merger is twofold,” he noted. “First it is about efficiency; second it is about creating value.

“As a customer, the merger between Janus and Henderson is positive, as it creates more competition in the market,” added Vignola. “In a sense, it may produce a stronger market participant and will enhance competition.”

He also pointed to the pressures that active managers were under from the passive funds industry.

Traditional asset managers do not generate as much alpha as they did in the past, said Vignola. That’s why clients switch from higher-fee products. "which are supposed to generate additional returns, to passive products, which offer reasonable returns at a fraction of the cost of an active fund", he added.

Indeed, Julius Baer’s clients have been increasingly trading exchange-traded funds more like securities, said Vignola, which he viewed as sensible. “In terms of asset allocation, some of the ETFs have done well. It’s a cost-effective way to get exposure to markets.”