"Kate and I, we've been spending a lot of time talking about things like strategic partnerships or joint ventures ... with someone who brings a capabilitie that's complementary to ours."

Kate C. Burke Allspring Global Investments President, Board Member

So says Joe Sullivan, CEO and chair of Allspring Global Investments [profile]. Sullivan and Kate Burke, president and board member at Allspring, were interviewed today at the Charlotte, North Carolina-based fund firm's 2025 outlook and media luncheon at the Royalton hotel in New York City. (The event also featured remarks from some of Allspring's top investment leaders.)

It's Not Really M&A ... But Is It the Most Interesting Thing About M&A?

Sullivan brought up the strategic partnerships idea in the context of a discussion about asset management industry M&A trends and opportunities.

"It's about companies getting away from this notion that we have to do everything," Sullivan says. "Maybe we don't have to do everything."

"Kate and I think about that all the time," Sullivan adds.

Burke tells MFWire that it's still too early for the Allspring folks to talk about specific possibilities for joint ventures or strategic partnerships. Yet she, like Sullivan, describes such possibilities as a key area of interest for the Allspring team. Perhaps such partnerships or joint ventures could bring Allspring more into alternatives or private credit. (Sullivan describes "private markets and alternatives" as "what's hot in the market" now in terms of asset management M&A.)

What's Driving AM M&A?

As for M&A opportunities, Sullivan says he expects continuing consolidation. He doesn't share specifics, but he offers a three-category system for looking at opportunities. One is "transactions that are really scale-driven." (Note that Allspring, as of the end of September, has $590 billion in AUA, 20 offices, and 1,400 employees, including 400 on its investment teams.)

"All I'm doing is just adding scale and finding where to rip costs out and get operating leverage out of doing that," Sullivan says. "The second way to think about it is, is it capabilitie accretive? How does it improve or expand our investement capabilities, or improve or expand our distribution capabilities, or improve or expand our vehicle capabilities?"

"And then the third way, an ideal way, is both, if they're both scale accretive and capability accretive," Sullivan says.

Pressures like costs, lower fee rates, regulatory issues, and technology spending will drive more consolidation, Sullivan adds.

"This is where scale matters," Sullivan says. "We will see continued consolidation of those who just simply say, 'We can't get there on our own, big enough, fast enough, to invest, to compete.'"

What Is Fundsters' Biggest Challenge?

On another area of strategic concern, Sullivan describes the need to differentiate as "the greatest challenge" facing both Allspring and its fund firm competitors. He notes that performance and price are both difficult to consistently differentiate with.

"Delivering good performance is table stakes. Doing so at a competitive price is table stakes," Sullivan says. "How do we actually differentiate?"

"We believe it's not so much what what we have that differentiates but that in combination with the how we deliver it," Sullivan adds. "So, we're focused on the client experience, which includes performance, which includes price, but it's a broader, more holistic experience."

Burke notes that a key piece of this puzzle for Allspring is "being vehicle-agnotistic and bringing [Allspring's] best investment strategies to the client in a way that they most want to consume it." Indeed, last week the Allspring team launched their first three ETFs, all active fixed income strategies, with plans to debut their first three active equity ETFs early next year.

"So we're agnostic on what is your vehicle of choice. There's a place for mutual funds. There's a place for SMAs," Burke says. "I expect that we'll continue to be launching more ETFs in '25 and into '26."

Burke adds that "there is a large opportunity set" for helping advisors help their investors with the tax benefits of using Allspring's customized SMA platform, Remi.

"A lot of this is helping the advisor base recognize that the vehicles that they're choosing for their clients have impact in how their ultimate performance may be, based on the client's unique position," Burke says.

That kind of help for FAs, Burke adds, is a key piece of the differentiation puzzle for Allspring.

"Our goal, ultimately ... is to be the easiest asset manager to work with," Burke says. "If we can differentiate in that regard, and provide you great investment performance, at a good cost, in the vehicle you want, and then have your client experience with use ... be easy to work with, in an industry that is largely complex, that can really help differentiate us." 

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