Generali and Aperture Investors have announced the launch of a new asset management company based on a different revenue model, led by Peter Kraus, former president and CEO of AllianceBernstein and Global Co-Head of the investment management division of Goldman Sachs.
Generali will offer up to 4 billion dollars in strategic investment capital for the various investment strategies, subject to the approval of the boards of Generali and Aperture Investors.
“In Aperture Investors' revenue model – explains the note from the Trieste-based company – the company charges basic commissions like those of ETFs, which can only increase when managers exceed the reference benchmarks. Similarly, managers receive a limited base fee and can only earn more when they generate outperformance, an important departure from the traditional fixed fee structure where managers are compensated based on the volume of assets under management. In addition, a (long-term) deferral system ensures that unearned fees are returned to Aperture Investors clients, ensuring that the firm's profitability depends on whether or not its clients receive returns in excess of the benchmark over the long term. ”.
Tim Ryan, CEO of Generali Asset Management, commented: “Aperture Investors represents another important milestone in Generali's multi-boutique strategy launched last year. We believe that innovation is not only an essential lever for our long-term success, but also an opportunity for Generali to lead the change process as a leader in the insurance and financial sector. Aperture Investors gives us the ability to develop a new model for manager incentives, while also leveraging the invaluable know-how in our industry."
“Asset management is an industry that has long awaited change. There are currently too many active managers managing too much money. Fixed fees and a lack of real constraints on fund capacity have long incentivized managers to grow assets under management rather than seek to outperform,” said Peter Kraus, president and CEO of Aperture Investors. “This structure has led to years of underperformance which has eroded client confidence in active management. This is what we intend to change by aligning manager and client incentives around outperformance. We do this by charging similar fees to passive ETFs when we perform in line with or below a defined benchmark – which only increase when we generate outperformance. It is our belief that investors would be more likely to pay for a return than to pay whether or not they get it, and the only way to do that is by fundamentally changing the traditional model of fixed fees based on assets under management." .
