Martin Gilbert talks acquisitions, wealth and ETFs
Martin Gilbert, famously, was the co-founder of Aberdeen Asset Management plc at its launch in 1983 and was its Chief Executive until 2019, and finally stepped down from his role as Chairman in September 2020.
Over his period of tenure, Aberdeen became one of the world’s leading independent asset managers through a combination of organic growth and strategic acquisitions. In its first year, the business had assets under management (AuM) of GBP70 million and reported profits before tax of GBP. By 2016 the figure was GBP352 million with AuM at GBP312 billion.
Aberdeen merged with Standard Life in 2017 to form Standard Life Aberdeen (SLA). Following the merger, Gilbert was appointed co-Chief Executive Officer, a role he stepped down from in March 2019. Gilbert was Vice Chairman of the group from March 2019 until May 2020. As at 30 April 2020, SLA’s AuM is GBP512 billion.
Gilbert stepped down as Chairman of Aberdeen Standard Investments, the asset management business of SLA, on 30 September 2020.
He is now chairman of AssetCo, an asset management acquisition vehicle that has put boutique firms on ‘red alert’. But one of its first steps has been to take a majority stake in the UK’s thematic ETF issuer, Rize ETF.
Beverly Chandler, ETF Express managing editor, has had the opportunity of quizzing Gilbert on his plans for his new firm, and his thoughts on ETFs.
Q: Having had such a long and successful career in fund management, what has made you decide to set up AssetCo?
I’m only 66, so I’m too young to retire.
I co-founded Aberdeen Asset Management back in 1983 which went on to become a leading global asset manager. Along the way I learnt many lessons which will help as we build AssetCo.
The asset and wealth management industry is experiencing huge structural shifts, whether in terms of the rise of passive, the move from public to private markets, more regulation or the onus increasingly on the individual to take responsibility for their financial future.
These changes present challenges as well as significant growth opportunities. As a new entrant, we don’t have some of the legacy constraints which prevents some incumbent businesses from adapting and moving forward. Both Rize ETF and Parmenion, an investment and advisory platform, play to the structural shifts facing the industry. In the case of Saracen Fund Managers, it is a more traditional fund management business, but is nimble enabling it to take advantage of the changing industry landscape.
With AssetCo we’re not looking to create a global giant, but instead build an agile, innovative business that will deliver for clients and investors.
Q: Why do you think the acquisition route across the wealth and asset management industries is the right one to take at the moment?
Acquisitions help when you’re looking to establish a business as you’re investing in established operating models, run by talented people with great potential. But acquisitions can never be the sole route to building a successful business. Long-term organic growth is crucial and where our focus will be.
Q: You have taken a majority stake in an ETF issuer, Rize ETF. Why did you take that stake?
ETFs are the future and will increasingly become core components of investors’ diversified portfolios. So far most of the flows into ETFs have so been into S&P 500 or FTSE 100 index trackers - an area dominated by iShares, Vanguard and State Street. But actively managed and thematic ETFs are coming to the fore.
Rize ETF is a tech-savvy business which is agile but at the same does not rush out new products at the blink of an eye. I’ve been impressed by the in-depth research and analysis the team undertakes together with the external houses they work with when looking to launch a new ETF. A good example is the recently launched Environmental Impact 100 ETF and the partnership with Sustainable Market Strategies in Montreal.
Above all, the Rize team is group of a very talented and motivated people whose vision for the future of asset management is aligned to our own.
Q: What role do you think ETFs have to play in asset management in Europe at the moment and going forward?
ETFs usage in Europe still lags behind the US. I expect this to change. Overtime I see ETFs being increasingly used in portfolios all across the continent. You only need to look at the number of incumbent asset managers that have started to or are desperately trying to develop an ETF capability.
Q: How does the low-cost ETF sit within the traditionally higher cost traditional wealth management industry? Is there an anomaly there?
We’re seeing cost pressures throughout the asset and wealth management industry. Active managers are lowering their fees but so are index managers. I think cost-effective ETFs that deliver innovative and forward-looking strategies for investors are well placed to help wealth managers and their clients capture the inter-generational transfers of wealth from Baby Boomers to Millennials and Gen Z.
Q: Plans for the future? Other acquisitions? Any others within the ETF space?
Our immediate focus is on firing up the Saracen Fund Managers and Rize ETF businesses, complete the acquisition of 30 per cent stake in Parmenion and develop further all of the businesses' organic growth plans. We are open to looking at other businesses that can help AssetCo take advantage of the structural shifts occurring within the asset and wealth management industry.