UK/NETHERLANDS - The ING Group is continuing its corporate restructuring, started in October 2006, with the full separation of the banking and the insurance unit, including its asset management unit, said ING Investment Management's (ING IM) new Europe CEO Michel van Elk.
van Elk said the moves were the next chapter in the back to basics strategy to simplify the organisation, and to focus on investment excellence and client service.
van Elk was named chief executive of ING IM Europe yesterday, and replaced Gilbert Van Hassel who took on the role of global chief executive officer of ING IM earlier this month. (Global Pensions; November 23, 2009)
"We will be exploring all options right up until 2013 to complete the restructuring," he said speaking in London. The firm now has some €400bn (US$598.9bn) of assets under management and rates itself as one of the top 100 asset managers worldwide. It is also the sixth largest insurance company in the world by revenue.
van Elk said the asset management unit would begin reporting separately in 2010, and continue to invest in products, systems and people. "For our clients, they are interested in performance. The corporate moves are not so important to them," he commented.
However, they have proved vital to motivating the teams in the new multi-boutique structure, allowing individuals space and support to perform to the best of their ability. ING IM restructured into a multi-boutique model in March in a move it said would improve performance and help it better manage risk. (Global Pensions, March 12, 2009)
Chief investment officer Jan Straatman said ING IM would continue to drive forward investment performance, backed by strengthened risk management, and move away from the "product push" which has characterised much of the industry in recent years.
"If clients want active management a couple of points above the benchmark is not really enough. In the past growth has been rapid so if you just copied your neighbour you were doing OK. Complacency set in. Portfolio managers dropped pure alpha and accepted Beta which led to increasing correlations and crowded trades. Now we are looking for a more skills based approach."
Within ING IM there are three keys themes for 2010. These are the divergence evident in macro, markets and sector themes, critical changes in volatility and liquidity, and a strong preference for emerging markets. ING IM managers will be seeking sustainable growth and yield support in a medium-term, low nominal GDP, and low return world.
Eric Siegloff, head of strategy and tactical asset allocation, said divergence was apparent between developing and emerging economies, between corporates and households, producers and consumers, public and private finances and growth versus defensive strategies by asset class, sector, region, style and risk appetite.
Emerging markets are viewed as the common denominator of many of the divergence patterns which became evident in 2009, Siegloff said. Within the sector there is a preference for yield, for large cap stocks offering quality, high dividend strategies and for higher rated spread products in fixed income markets.
Investors' perceptions of emerging markets have changed as these countries have strengthened their private and public finances. Additionally, if there is another financial shock, they are seen as best placed to weather it. Unlike previous market setbacks, most emerging markets are no longer so reliant on exports to support economic growth, boosted instead by domestic consumption and intra-regional trade.
Siegloff identified five key risks: precipitous withdrawal of quantitative easing and other supportive fiscal and monetary measures, non-linear oil prices changes, financial sector regulation, rising policy interest rates and fiscal policy rectitude. Inflation is not seen as a short or even medium term threat.
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