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Tuesday, February 13, 2001

Under Construction

Reported by Tamiko Toland

Investec Asset Management is blueprinting a plan to invade the American market. Although the firm is both ambitious and aggressive, it is eyeing its path carefully as it strategizes how best to reach investors in the United States.

"It's quite refreshing coming in, knowing absolutely nothing," said Royce Brennan, managing director of Investec. "There are no pre-conceived expectations and conventional wisdom."

The firm is relying on staff with American marketing know-how, but it will still leverage its off-shore muscle. Investec uses a global marketing team which brainstorms and pools ideas that can be adapted in different regions. Furthermore, the firm's recent distribution deal with Merrill Lynch came courtesy of Cape Town connections: Investec agreed to help Merrill Lynch breech the South African market. In turn, those high-level contacts eased Investec's entry into the American market.

As part of a two-stage plan, the firm is in the process of opening an office in Stamford, Connecticut. Investec is literally starting from scratch, completely gutting its new office space. The first wave of employees will strike out on a marketing effort with in-house fund managers to follow.

"We're fitting out the office with 22 desks and that's probably about as big an organization we expect to have," said Brennan. "We'd rather have a highly-focused and energized team of people making lots of money as opposed to a monolithic organization with all the problems that come with that."

The firm is actively looking for five wholesalers for the domestic market and two wholesalers who will serve the Caribbean off-shore market. About a year from now, Brennan said the firm will move forward with phase two, where Investec will bring on five or six investment managers. While a few may come from the firm's London, Cape Town, or Hong Kong offices, Brennan added that he looks forward to mining local talent.

Brennan said Investec is not anxious to start up new products without first gauging the local market. At present, he is focused on changing the distribution direction taken by his predecessor, Jim Atkinson. Atkinson is now president of MAXfunds.com, in Ann Arbor, Michigan. Brennan and his colleagues are looking at changing the funds' pricing structure to accommodate the advisor market.

"My predecessor was operating very much down the no-load do-it-yourself type of investing," he said. "It didn't take me too long to realize this was a very narrow sliver of the market. In fact, people are not doing it themselves. Financial planners are a growing part of the marketplace, and we haven't been operating in it, which isn't very sensible."

How long does Brennan see until the firm brings on bigger changes, such as adding new products?

"I think six months, given the fact that I won't be in an office until the end of the month," he said. "We could rush this and do a bad job or take our time and do a good job. We want to spend a lot of time figuring out what the market is interested in in all the different channels."

 

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