A lesser-known arm of Barclays Capital is its Fund Solutions business, launched six years ago. This year it plans a further push into the high end of the retail market, writes Neal Underwood.
Barclays Capital Fund Solutions differs from its competitors in terms of its pure scale, says Bance. “We’ve got the structuring and the quantitative research. [Barclays Capital has] about 800 people in research of whom about 90 are managing directors. In the structuring department there are 200 people globally who are always looking to build solutions for institutional clients. We can roll some of these out to retail investors. There may be a number of products we build which are available later down the line for retail.”
Barclays Capital uses the proprietary Alpha Variance model for its quantitative analysis, which is used to aid the investment process on some of its funds.
“Increasingly, absolute return products require one person to take a purely qualitative view,” says Bance. “This is very difficult if you’re investing multi-asset and can invest long/short. There are so many different aspects to it. The asset management business is a global business; there’s been a roll-out in that in the last six to 12 months.”
Another differentiator is that, at least at present, none of the firm’s funds have a performance fee.
Despite its scale, Bance still considers Fund Solutions an entrepreneurial business. “But you have the balance sheet of a large organisation and a good brand. It’s a unique combination. It’s a boutique within an organisation which is benefiting from all the infrastructure. It’s a nice match.”
The firm aims to grow appreciably over the next five years, according to Bance. “We’d like to see those assets grow significantly given the platform we’ve built and the hires we’ve made.
“With a presence in Asia, LatAm, Europe, Scandinavia and America we have a global footprint. Some products are better run from outside London. The Asian Reits fund, for example, uses a covered call overlay. This is run out of Hong Kong as we have the most experience in trading these derivatives there.”
While he is reluctant to put a definite number on a target for assets under management, given the uncertainty over how markets may perform, Bance says that moving from the present £4 billion to about £10 billion would be viewed as a success.
“It’s that type of incremental addition. We want scale and a broader range of products. We’re building more touch points and communications. Not many people know about Barcap having a £4 billion asset management arm.”