JPMorgan Asset Management has outlined ambitious targets to double its assets under management in Europe to $2tn in the next five years, in a bet that the continent’s wealthy can drive growth at the investment division of the Wall Street bank.
“Europe is a very good place for us to continue to grow,” Patrick Thomson, chief executive of JPMorgan Asset Management for Emea, said in an interview. “Our three strategic priorities — active ETFs, alternatives and developing partnerships with the biggest wealth managers — are going to drive our growth.”
JPMorgan Asset Management has already doubled its assets in Europe over the past nine years from $500bn to $1tn, boosted by rising markets and inflows from new and existing clients.
Alongside BlackRock, JPMorgan established an early lead in Europe in the market for active exchange traded funds, which combine an ETF wrapper with active management rather than passively tracking an index.
Its European active ETF business has grown to $60bn since its launch five years ago. Thomson said the products had further potential, with ETFs becoming the first point of entry into investing for mass affluent and younger investors.
Thomson said there were opportunities for investors in European equities and European fixed income, where volatility in government bonds makes for a fertile environment, and in infrastructure, where there is huge demand for capital to invest in energy grids and transition.
More than 85 per cent of JPMorgan Asset Management’s funds ranked above median over the 10 years to July 31, according to data from Morningstar Direct.
JPMorgan’s ambitions come as Europe’s asset management industry is forecast to grow 5.6 per cent a year to reach almost $50tn by 2030, according to a PwC report.
PwC predicted the amount allocated to alternative assets in Europe — in investments such as private equity, private credit and venture capital — will grow from $3.3tn in 2020 to $7.7tn by 2030 as regulators seek to widen access to private markets.
“There’s a significant effort by policymakers to move savers to investors,” said Thomson.
The industry is increasingly split between scale providers such as JPMorgan, that offer a broad range of strategies, and specialist players. Firms have sought scale and diversification, sometimes through mergers and acquisitions, in pursuit of cost efficiencies and new growth channels.
Scale was particularly important “on the technology agenda,” said Thomson. The JPMorgan parent bank invests $20bn a year in technology, while its asset management business invests $600mn a year in its technology platform globally, and employs 1,400 engineers. “That’s an expensive commitment but we think it’s necessary,” he added.
JPMorgan has resisted dealmaking, however. “We’ve not done any major acquisitions because we think they’re hard,” says Thomson. “We favour organic growth.”
Looking ahead to the first Budget under Prime Minister Andy Burnham’s government later this month, Thomson said he was optimistic about the UK’s prospects.
“I’m pretty bullish on the UK because everyone is so negative about it,” he said. “We would like to see stable, sensible policies that are pro-growth in the Budget.”