How Aegon Asset Management is stepping up to the global challenge has been saved
How Aegon Asset Management is stepping up to the global challenge
Interview Bas NieuweWeme (Aegon) and Marieke van Eenennaam (Deloitte)
Recently, Performance Magazine published an interview with Bas NieuweWeme (CEO, Aegon Asset Management) and Marieke van Eenennaam, partner at Deloitte Netherlands. They discussed the challenges in the current competitive landscape: changing client demands, e.g. in the field of ESG, and the hunt for yield in the current low-interest environment, which is fuelling interest in alternative investments. How is the industry responding to these challenges and how is Aegon Asset Management transforming itself to meet these new requirements?
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- Key changes in the market
- New strategy
- Implications for clients, talent, and product niches
- COVID-19 and future outlook
- About Aegon Asset Management
Key changes in the market
When asked by Marieke about the key changes in the market, Bas NieuweWeme explains how the demand for active asset management is softening, competition is fiercer and fees are under tremendous pressure. Meanwhile, costs for asset managers and investments in new technologies and compliance have increased. The growing importance of ESG (Environmental, Social & Corporate Governance) has affected these dynamics. An increasing number of corporations in Europe and the United States are committing to goals for carbon emission in the next decade and beyond. Simultaneously, the focus of economic activity and investment flows is shifting eastwards. China has become the world’s second largest asset management market and is gradually opening up. Aegon was an early mover that already partnered up with a Chinese brokerage firm. Also, Aegon is setting up a Wholly Owned Foreign Enterprise and applying for a Qualified Domestic Limited Partnership quota. This will allow the firm to market European and US-made products to Chinese high net worth clients.
Marieke goes on to ask Bas about the response of Aegon Asset Management to these trends. The firm has recently introduced its new strategy: growing the business and building a globally competitive asset manager by significantly lowering cost levels over time, and enhancing the service to clients. ‘In a market where margins are under pressure, companies need to be extremely efficient. So, the key strategic imperatives we saw were to avoid duplication of efforts and to fully align our operations.’ For instance, last year all activities were brought together under a single brand (Aegon Asset Management), one global management board was appointed, and four global investment platforms were set up: Fixed Income, Real Assets, Equity, and Multi-Asset and Solutions. The next step consisted of aligning the back and mid office. ‘The result will be one front office system, one risk management system, one client reporting system and one accounting system. All state of the art.’
Read more about opportunities provided by platform providers for investment managers in the article Investment Management Platform Providers in Performance Magazine issue 35.
Implications for clients, talent, and product niches
Bas explains to Marieke how Aegon Asset Management is keeping employees motivated and how clients will benefit from the changes. He also mentions a number of new products – four in 2021 alone. For instance, Real Assets is an asset class that renders higher yields. ‘Aegon’s general accounts make investments, and we are able to leverage that for third-party clients in agriculture lending, commercial mortgage loans and workforce and affordable housing. This has given us a differentiating position in the US in particular.’ He continues: ‘In traditional equity and fixed income, we have an edge over our Anglo-Saxon rivals in this corner of the market, thanks to thirty years of ESG investing experience and a 15-people strong dedicated responsible investing team with very highly skilled experts.’
COVID-19 and future outlook
Looking back, COVID-19 has been an accelerator for the transformation. ‘It has actually helped us build a global culture and enhance teamwork between time zones.’ When Marieke asks Bas where Aegon Asset Management will be in five years’ time, he replies that they will be ‘an active manager that has made very clear choices where we do and do not want to play.’ Key markets will still be the US, UK, Europe, and China. Product-wise the firm will be a leader in alternative fixed income, real asset, and responsible investment for both equity and fixed income. For the market as a whole, he foresees that AI and blockchain will change the way the industry invests money, and the way retail and high net worth investors access the market. Also, ‘people will not be able to rely on government and pensions for their retirement, so they will start accumulating wealth on their own.’ For the full story, please download the entire interview.
About Aegon Asset Management
Aegon Asset Management is an active global investor and part of the insurance giant Aegon. It has 380 investment professionals and around $475 billion in assets under management (year end 2020). The firm is a leading international player, with established units in the UK and the Netherlands, and growing activities in China, previously each catering to their own regional markets.