“Are we there yet?” asks Pross. “No, but we have a lot more appetite and we are looking into new opportunities.”
Fond familiarity
So who has been buying these new products?
There may be a good theoretical reason to buy the more unusual, less liquid, less correlated asset classes and strategies, but that is very different from actually finding substantial numbers of buyers.
This is where the next part of Pross’s argument for keeping the two parts of Allianz connected comes in: distribution.
Allianz has networks all across Europe through which Allianz GI funds can be sold. So, when it has a new product, it can tap into that without a massive marketing and sales effort.
The infrastructure is already there as long as the senior management is willing to promote new and unusual funds.
“We have the firepower,” says Pross. “If you have that firepower and money then usually we don’t need another intermediary to sell for us.”
This brings us to the final reason why he thinks they should retain the Allianz GI brand: trust.
Allianz, because it is in part an old, rather staid insurance company, has the reputation of conservatism and trustworthiness.
“Imagine if I personally offered you a chunk of infrastructure debt. Would you buy it? Now imagine if I said ‘there is this infrastructure debt deal happening and Allianz is taking a 50% share in it. Do you want to come in?’” Pross believes the latter is far more attractive.
What might seem to be a contradiction turns out to be a strength, according to Pross. When you are innovating, and thereby potentially scaring off new investors, you want the reassurance of a ‘safe’ name.
“It is a great combination: a conservative brand with new and exciting strategies,” he says. “Boring is the new sexy!”
Pushing the boundary
Of course, maintaining innovation is a challenge, especially if you are walking a fine line between cutting edge and safe.
Allianz GI has a need to find new products and strategies. Having had a very successful foray into alternatives, it has reached what is often the natural conclusion of a successful alts strategy – many of the funds have reached capacity. So, it needs to launch new funds or push existing ones into a space where they can grow.
“You build up a track record of trust and performance and then you get a little bit unleashed,” says Pross.
In its infrastructure debt fund, it initially only invested in senior secured debt, which is investment grade.
