UK-based global fund manager Henderson (ASX: HGG) — which was spun out of AMP (ASX: AMP) in 2003 — has announced the purchase of H3 Global Advisors.
The purchase of the Australian-based H3, which describes itself as "one of Australia's leading alternative asset management firms, with an extensive track record in commodities futures and absolute return trading programs", comes less than a year after Henderson announced that it would enter the Australian market through the partial acquisition of 90 West Asset Management – a global resources fund manager.
The acquisition of H3 is expected to add $342 million in funds under management to the group and follows the establishment of an alliance with TIAA-CREF to combine their real estate businesses to create a venture with around $21 billion in assets under management.
It is interesting to see the different manoeuvres being undertaken by fund managers in Australia. Perpetual (ASX: PPT) shut down and outsourced its global investment capabilities in 2011 following a review of its international capabilities. Meanwhile, Magellan Financial Group (ASX: MFG) has built an enormous business in a relatively short space of time by purely focussing on a domestically based international funds management capability.
Foolish takeaway
Financial service firms, particularly fund managers, which are highly leveraged to improving equity markets, have seen their share prices surge in the past 12 months. Henderson, Perpetual and Magellan are up 115%, 52% and 138%, respectively. This has resulted in much of the future earnings potential already being priced into the stocks.
AMP, meanwhile, with its exposure to a lagging insurance business, is down 1% over the same period. While headwinds in the insurance business are expected to take some time to overcome, it is amongst the few remaining laggards that savvy investors may find opportunities.
