The document discusses the shift in asset management from a profession to a marketing-driven industry, and argues that the ladder is leaning against the wrong wall. It suggests that the trend should move back towards privately-owned, entrepreneurial asset managers that specialize and focus on long-term client interests over short-term performance. Smaller asset managers with specialized strategies tend to outperform larger "supermarket" managers over time. New leadership is needed that prioritizes employee ownership, long-term clients, conservative innovation, and alignment with client interests through a commitment to stewardship over salesmanship.

1. ‘Putting clients first in a world that
generally doesn’t…’
Lars Dijkstra, Chief Investment Officer
Amsterdam, 27 januari 2011 Performance through Specialisation

2. Leadership is…
Management is about efficiency Leadership is about effectiveness
Climb up the ladder as quickly as See if the ladder is leaning against
possible the right wall
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3. Asset management: is the ladder leaning against the
right wall?
Foundations of a profession Facts in 2009
n Expertise n Jungle investment funds
n 80% of managers lags behind in
2008
n Discipline n Failing risk management
n Terror peer groups/benchmarks
n Reliable n Hedge funds are not keeping
promises
n Investment funds locked up
n Honest n High (not transparant) fees
n Complex credit products
n Madoff
n Trust
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4. Trust between clients and asset managers is under
pressure
n Owners ‘We have changed from a
n Originally: PM’s profession with aspects of a
n Subsequently: Publicly listed business, to a business with aspects
n Now: Conglomerate of a profession’
→ Consequence: Business
managers in charge J. Bogle, CEO Vanguard, 2005
n Portfolio managers need to
perform in the short run (career
risk)
n Sales sells in line with what
clients want ‘flavour of the
month’
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5. Conclusion: The ladder is leaning against the wrong
wall!
Asset management has evolved from a profession to a
marketing driven industry in the past 30 years
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6. What next…?
1 … Continue on the same path
2 … To passive managers
3 … Back to a profession
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7. McKinsey: ‘trend to passive and privately owned
managers’
Market share US asset managers
13% 16% Passive
22%
managers
Publicly listed
51% 35% conglomerates
65%
‘Privately owned’
43% managers
33%
22%
2000 2005 2010
Source: McKinsey, “The Asset Management Industry in 2010”, published in 2006
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8. 2 … To passive managers
Advantages But is it effective as well?
§ Computer § Winners from the past
§ Scale § Bankruptcy candidates
§ Cheaper § Socially unethical
§ No underperformance § Seems cheaper than it is
→ Competition on cost and → Good relative risk and return,
efficiency but will it put food on your
table?
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9. 3 … Back to a profession
What type of asset manager will produce the best investment results?
I. Entrepreneurial, ‘privately owned’ managers
II. Managers with focus and specialisation
III. The smaller the scale, the better the results
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10. I ‘Privately owned’ managers outperform
Asset manager
1. Dodge & Cox
2. First Eagle
3. Calamos
4. SouthEastern
5. Royce
6. American Funds
7. Harris Associates
Asset manager
48. Merrill Lynch
49. Aim
50. Nations Funds
51. American Express
52. Black Rock
53. Pioneer
54. JP Morgan
Source: John Bogle, Financial Analyst Journal, November/December 2005
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11. II Focus and specialisation both work
Asset manager Number of funds
1. Dodge & Cox 4
2. First Eagle 5
3. Calamos 8
4. SouthEastern 3
5. American Funds 26
6. Royce 14
7. Harris Associates 7
Asset manager Number of funds
48. Merrill Lynch 58
49. Aim 62
50. Nations Funds 42
51. American Express 60
52. Black Rock 32
53. Pioneer 24
54. JP Morgan 38
Source: John Bogle, Financial Analyst Journal, November/December 2005
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12. III The smaller the scale, the better the results
Average annual US mutual funds outperformance
Small 0,5%
Specialty shop better
-0,9% Large than supermarket
Source: Cremers en Petajisto (Yale) “How active is your fund manager?”, 2006
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13. New leadership required in asset management…
n Employee ownership and long-term loyal clients
Business n Focus
Strategy n Conservative innovative: transparant, simple and high
expected absolute returns
n Alignment with clients interests (best form of risk
Investment management)
Philosophy n Investment culture founded on sound principles
n Long-term committed and engaged shareholdership
n Stick out neck for clients (take career risk)
People n CQ > IQ
n Your ‘trusted advisor’
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14. Conclusion: away from marketing, back to a
profession!
n From Salesmanship to Stewardship:
Money does not bring quality, but quality
brings money!
n Do not sell investment products to your
clients which you would not buy yourself
n Your role as a client?
¡ Select asset managers with new
leadership characteristics
¡ Buy investment products that are out of
favour!
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