GLOBAL - Deutsche Bank and ABN AMRO have entered into agreements with Mercer Investment Consulting to buy currency manager research.
Deutsche Bank’s FX Select multi-manager platform went live in April and ABN AMRO is gearing up to launch its in the coming months.
In effect, Deutsche and ABN AMRO are outsourcing the qualitative analysis of managers to Mercer.
Whereas Deutsche Bank affords access to Mercer research to any client using the FX Select platform, ABN AMRO uses the research as a first screen, from which it then blends Mercer-rated managers using quantitative analysis.
Rashid Hoosenally, head of client strategy – foreign exchange, Deutsche Bank said: “Mercer's research is available to clients, and they are free to have a consulting and/or fiduciary arrangement with Mercer and/or any other third party that they wish. Our own indices are 100% rules based, and not based on Mercer's research, however, there is nothing to preclude a client requesting a custom index based on Mercer's research.”
James Binny, director of FX analytics and risk advisory, ABN AMRO said: “Where we have a very transparent and quantitative process for allocating between managers we can show independence of thought. But there is an aspect to choosing any form of asset manager that is more qualitative and it’s much more difficult for us to demonstrate our lack of conflict there.”
Broadly speaking, the research is paid for based on a combination of fixed and asset-based or performance fees, although Bill Muysken, global head of research, Mercer IC, declined to comment on the exact details of payment for each deal.
A condition of the provision of such research is that the banks cannot share the research with their proprietary trading desks. Muysken said that the banks have made an undertaking in writing to enforce this.
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