Virtus is its own reward for KBI offshoot

One More Thing:Dublin-based asset manager Kleinwort Benson Investors (KBI) has had a busy time of late.

The specialist fund manager secured a number of substantial mandates from overseas towards the end of last year and has just agreed a strategic alliance with Nasdaq-listed Virtus Investment Partners to develop business interests in the $13 trillion mutual fund investment market in the US.

Virtus has acquired a 24 per cent interest in Kleinwort Benson Investors International, Ltd, a wholly owned subsidiary of KBI.

This entity is Irish registered and authorised by the Securities and Exchange Commission in the US.

Based in New York, it has traditionally focused on the institutional market and last year broke through the $1 billion mark in assets under management.

KBI’s chief executive Sean Hawkshaw was tight-lipped about the financial terms of the deal with Virtus but said it was positive for the Irish fund manager in two ways.

“We will get access to their distribution in the US and it also gives us access to the mutual funds market there,” he said.

“Virtus was only set up in 2010 but it’s performing very well and this looks like an exciting partnership for us.”

The deal is expected to close early in 2013, subject to the customary closing conditions and regulatory approval.

In terms of mandates, KBI increased its funds under management last year by about 30 per cent to close to €4 billion.

New mandates have recently been secured from the Leicestershire County Council Pension Fund in the UK, the Philadelphia-headquartered fund-of-funds manager SEI, and OP Pohjola, Finland’s largest banking group.

What does Hawkshaw expect in 2013 from investment markets?

“Last year, bonds and equity markets both performed well, recording double-digit increases,” he said.

“The bubble in bonds won’t continue. I think it will be another good year for equities while corporate bonds will probably struggle.

“The SP has just gone through 1,500 for the first time since 2007. We would expect to see a rebalancing into equities by investors this year, which is important for us as we’re primarily an equities manager.”

He said KBI’s focus as an asset manager was on companies offering “growing and substantial dividends”.

Emerging markets will probably “outperform [this year] having lagged in 2012”, he added.

He’s also predicting a “good year” for the Iseq, citing increased overseas interest from institutions in allocation funds to Irish equities.

“Ireland is now viewed by investors as a credible turnaround story.”