TOP fund manager companies come in various shape and sizes, catering for the growing and changing needs of the investment community. The Fidelity Investments Group and Global Asset Management (GAM) are two houses represented in Hongkong which demonstrate the diversity in the industry. Fidelity Management and Research Corp was established in Boston in the United States in 1946. The father of the present chairman, lawyer Edward Johnson, had invested in a Fidelity Mutual Fund. When the fund did not do well, Mr Johnson thought he could dobetter and bought it. What was worth US$3 million in 1946, has now grown to $220 billion dollars. It is one of the biggest fund management groups in the world. Although its main operations are in the US, Fidelity has recognised the growing global demand for mutual funds, particularly in Asia, where it has offices in Tokyo, Hongkong, Taipei and Singapore. According to the Fidelity group's managing director, institutional business, Southeast Asia, Richard Darke, this year was turning out to be one of the company's best ever. Mr Darke said both retail and institutional business had been growing. ''The company is working to develop on both fronts as each is important. Although in the US the group made its name as a retail operation, it has about US$70 billion of institutionalfunds under management.'' One of the reasons for the marked increase in business can be put down to the growth in the number of products. Mr Darke said the business had changed a lot. Money funds, in particular, were growing rapidly. He said Fidelity had been at the forefront in this area. In addition, there had been growth in fixed-income products so, although Fidelity had the reputation of being an equity house, the assets under its management were now fairly evenly distributed in money funds, bonds and equities. The changes were because interest rates had fallen around the world. Mr Darke said that the business Fidelity was picking up had not been an alternative to equity investments, but as bank deposits. Also in the US, defined contribution retirement benefit schemes (where employees had choice and control over the way their retirement scheme was invested) had become big business. Over the last five years, Fidelity had built defined contribution schemes into a $45-billion dollar business. Mr Darke admitted making a choice from the plethora of fund managers and products available was not easy. He said there were a number of well-qualified investment houses. ''The investor must look for a company with, among other things, a broad range of products where over-the-range managers deliver a reasonably good performance. ''Unfortunately, historical performance does not teach you about future performance, therefore it can only be an indication. One must go beyond that, and look at depth of resources and technical knowledge, size, and the ease and costs of switching [moving your money between products]. ''That group must have a disciplined investment process, resources and technical knowledge and, if these are put together properly, the results will be shown in the performance,'' Mr Darke said. For the director of GAM, James Cundall, a fund manager cannot live by resources alone. Mr Cundall said fund managers also had to be able to feel their way through the world's financial markets. GAM is a very different company from Fidelity. Its main business is discretionary portfolio management for private clients. Rather like private banks, GAM deals with high-net-worth individuals, providing a confidential and specialised service. The group is a niche player in the fast expanding market of fund management. To have GAM look after your assets, you must invest a minimum of US$1 million. Like those who choose private banks, the investors are looking for a particular service, but one that they have to pay for but. Mr Cundall said it was like making a choice between an ordinary sedan and a luxury car. ''Obviously, if you can afford it, you would go for the better car,'' he said. Unlike the Swiss private bank model, GAM only offers its clients discretionary portfolio management. A client's portfolio is constructed from a family of 86 mutual funds, depending on the views and the risk profile of the client. GAM was founded in 1983 by Gilbert de Botton, a Swiss who had set up Rothschild's private bank in Zurich. With 285 staff worldwide, GAM has principal offices in London, Zurich and Hongkong. Mr Cundall said: ''GAM sees private clients as an industry in themselves and the group's approach is to let specialists work together to produce the best performance. ''Money managers are left to concentrate on what they do best, managing the funds, while the talking with clients is done by portfolio managers who, with the help of a team based in London, decide on the asset allocation for each client.'' GAM employs a multi-manager approach and, in doing so, it is able to make use of the top performers in the fund management world, whether they work individually or for GAM's competitors. Mr Cundall explained: ''Managers are the key to success, and no one house has a monopoly on talent. It limits potential results if you can only get access to the fund managers working under one company's roof.'' Like a private bank, GAM embraces the principals of capital preservation and low volatility, but Mr Cundall said this could result in good returns. Unlike private banks, GAM is very transparent. He said: ''The group uses funds as an investment vehicle and these are subject to public scrutiny, so you can see how well we do.'' But Mr Cundall said that managing money was not an exact science.
