ING Direct 2008 Annual Report Download - page 46

ING Group Annual Report 2008
1.2 Report of the Executive Board
44
Asset management (continued)
This was achieved by all three working closely to leverage scale,
investment expertise and best practices, in order to maximise
cross-selling opportunities. An example of this was the successful
distribution of ING’s European investment management Global
Currency strategy in Japan in close cooperation with the
investment management business in the Asia/Pacific. The fund
successfully attracted EUR 1.3 billion of inflow.
The strengthening of risk controls and risk reporting procedures
across the regions was improved.
In the second half of the year, as the financial crisis worsened,
the investment management businesses in Europe, the Americas
and Asia/Pacific focused very much on client communication,
advice and client retention. There was very close cooperation
among all three regions to assess market, credit and operational
risk exposures as well as thorough discussions about risk
mitigation scenarios.
ING Investment Management became a signatory to the United
Nations Principles for Responsible Investing (UNPRI), which is
designed to guide investment decision-making with a view to
corporate responsibility considerations. (See also the Corporate
responsibility section.)
Europe
Assets under management fell 15% to EUR 129.5 billion. Third-
party AuM declined by 19% to EUR 81.6 billion and proprietary
business AuM was 8% lower at EUR 48 billion. Limited outflows
from mutual funds were recorded as a result of the market
turbulence. The business unit strengthened its position in the
fiduciary market through a series of new relationship agreements and
the acquisition of Altis Investment Management. Altis is a leading
multi-manager specialist team based in Switzerland. The acquisition
was in line with the business’ ambition to be a leading solutions
provider. In addition, the institutional business in the Netherlands was
strengthened with ING/AZL entering into agreements to provide
fiduciary management services to two major pension funds, Pension
Fund Social and Economic Council of the Netherlands (SER) and
Public Authorities, and the Will Niemeijer Pension Fund as well as
TVM Verzekeringen. ING acquired AZL, a Dutch provider of pension
fund management services, in 2007 to boost its scale and market
strength in the European pension business.
ING IM benefited from the growth of ING’s insurance and pension
businesses in Central Europe. Operations in six Central European
countries serve an increasing broad spectrum of clients.
Despite the difficult market situation, ING IM established its
presence in the Middle East, which included local investment
capabilities, taking advantage of investment opportunities arising
from global economic changes as well as growth opportunities
in the region.
Americas
Assets under management fell 8% to EUR 139.4 billion. Third-party
AuM declined by 7% to EUR 74.9 billion and proprietary business
AuM declined 10% to EUR 64.5 billion. The financial turmoil
dampened the willingness of both retail and institutional clients
to add to their portfolios during the year. The business focused
its strategy on raising the visibility of three significant franchise
strengths – Senior Bank Loans and Small and Mid-Cap Equity. The
Senior Loan team was selected by the USD 190 billion California
Public Employees Retirement System (CalPERS) as one of three
bank loan managers to manage future CalPERS allocations to senior
bank loans. ING IM’s Senior Loan team also won a EUR 193 million
mandate from the Massachusetts Pension Reserves Investment
Management Board during 2008. In addition, the fundamental
equity teams in the US and the Canadian equity group continued
to be bright spots with recent sales wins.
The retail side of the investment management business realigned
its sales force to focus on improved client segmentation and
increased traction with broker dealer investment platforms and
with ING’s Retirement Services Group. Despite challenging market
conditions there were several positive developments during the
quarter. Separately Managed Accounts sales increased by 13%
during the year from EUR 414 million to EUR 466 million, assets
were added to the VP Growth and Income Fund through a merger,
and the ING Global Target Payment Fund, one of the first open-
end managed payout funds, was launched in September.
Pomona Capital, part of the Alternative Assets Group, saw
strong ongoing fundraising of EUR 860 million in the Private
Equity Fund of Funds. Performance in ING’s Fund of Hedge Funds
was relatively solid despite difficult market conditions and there
are good prospects for the marketability of this fund. In spite
of the challenging market conditions, investment management
in Latin America continued to deliver strong relative investment
performance across the region supporting growth in ING’s
mandatory pension and annuities businesses. In its third-party
business, assets under management in institutional private
pension plans continued to grow offsetting weakness in retail
mutual funds. In January 2009, ING launched its Chilean mutual
fund company.
In the coming year the business will place increasing emphasis on
returning to its basic core strengths and improving its investment
performance and product development for its customers. In addition,
the business’s already strong risk management resources will be
further improved.