Natixis Global Asset Management, which narrowly missed out on Global Investor/ISF's asset manager of the year award, has focused its worldwide growth strategy on the expansion of distribution capabilities and product development.

In so doing, it has sought to challenge the traditional asset management model where manufacturing, stock picking and everything else is done under one roof and brand. 

“There are one or two downsides to that model,” explains Natixis deputy chief executive officer Chris Jackson. “If you have enough different fund strategies or franchises that are resonating with the market, then great. But when you don’t have as many resonating, you still have that same distribution infrastructure and risk ending up with too much of it behind too few strategies.”

The Natixis model is best considered as a distribution business that sits in the middle of approaching 30 autonomous fund management houses. Effectively, it packages and represents all of those fund managers globally.

There is, says Jackson, always a specific product or a strategy that fits a particular requirement of any client. “Put simply, we are not compelled to leverage our distribution behind a very small number of products.”

Natixis’ strategy presents a different challenge, one of how to represent so much diversity through a single distribution business. Natixis’ solution is to maintain a portfolio research and consulting group – made up of ex-fund managers – that discusses portfolio construction with clients and then advocates certain principles to permeate throughout the business.

Under the Natixis template, the process does not to start out by aiming to sell an existing product. Rather, it engages in a debate with intermediary clients about portfolio construction and setting goals for investors – before developing that through a technical discussion on the efficiency of portfolio construction.

“We can do analysis on generic portfolios for our intermediary clients and discuss things they see within those portfolios that we might be able to do something about,” says Jackson. “For example, if there’s three funds in one portfolio that are highly correlated, why not drop two of them and think about currency or commodities, where it is not exposed and which would have beneficial portfolio construction outcomes?”

Recent new product offerings from Natixis include ones that target returns from a diverse mix of opportunities around the world, such as H2O Multi-Aggregate, H2O Emerging Market Debt, Mirova European Real Estate Securities, Ossiam Shiller Barclays CAPE US Sector Value, Loomis Sayles US Aggregate Bond, Loomis Sayles US Core Plus Bond and Ossiam Japan Minimum Variance.

“We have a business called H20, an investment management firm based in London. From feedback we’ve had from our durable portfolio construction conversations with clients, we’ve found there aren’t many hedge fund type global macro strategies with a yield. So we’ve worked with H20 and put together a multi-asset global macro product launched in the UK with a yield, which has resonated fantastically well in the marketplace,” says Jackson.

Natixis has also launched a global equity fund with one of its US affiliates, Harris Associates, with around 20 stocks in the portfolio. “We know that there’s a lot of issues around benchmark hugging, a lot of polarisation between passive and active so we wanted to put something out that was firmly in the active conviction camp for global equity.”

Jackson highlights this polarisation of passive versus active as one of the biggest issues confronting the global asset management sector. “We’re moving away from that situation where investors blindly buy passive investments believing cheaper is better. Yes, there’s a place for it, but it’s no panacea for getting value for money out of your investments.”

Given the wealth and depth of manufacturing that Natixis has behind the distribution business, Jackson sees the key challenge as to constantly try to innovate and adapt the manufacturing to products that fit opportunities in the market today. “Innovation and adaptation is absolutely key to the way we try and present ourselves to the market,” he says.