(Bloomberg News) Wells Fargo & Co. will double its $444 billion asset-management unit within seven years by expanding in international markets as wounded European rivals retrench, according to division chief Mike Niedermeyer.
The firm will add foreign stock and bond strategies to its U.S.-based mutual-fund unit, open six more Luxembourg-based funds for offshore clients and wrest business from competitors, Niedermeyer said in an interview. The San Francisco-based bank, the biggest U.S. home lender and owner of the nation's largest branch network, also seeks to buy a business that would give clients greater access to handpicked hedge funds, he said.
Chief Executive Officer John Stumpf, 58, is plowing resources into businesses such as asset management as new global bank regulations and record-low interest rates crimp profit. Morgan Stanley and Bank of America Corp. sold U.S. mutual-fund units in the past three years, and Deutsche Bank AG has sought buyers for a division focused on the Americas.
"We're at a tipping point for the industry," Andrew Karolyi, a finance professor at Cornell University's Johnson Graduate School of Management, said in an interview. "You have seen some banks saying they want to double down while you have others saying we want out. Asset management, as a business, is as tough as it's ever been."
Asset management serves institutional clients such as pensions and endowments, sovereign-wealth funds and corporations. It's separate from the bank's wealth-management unit, which houses Wells Fargo's retail brokerage and manages funds for individuals. Managers are outlining the unit's goals today as part of the bank's Investor Day presentation in San Francisco.
Wells Fargo, with JPMorgan Chase & Co., is among the last of the major U.S. banks to own a mutual-fund business, managing about $215 billion in money-market and mutual funds under the Wells Fargo Advantage Funds name, Niedermeyer said. The business, run by Karla Rabusch, was bolstered by Wells Fargo's 2008 purchase of Wachovia Corp. and its Evergreen Investment Management Co. unit, which added $67 billion in assets.
"Having a model and consistent long-term strategy is a key issue," said Niedermeyer, who joined Wells Fargo 24 years ago. "If we do great work we will grow faster than the industry."
The Advantage funds attracted or appreciated by about $14 billion in the year ended March 31, making it the 17th-largest fund family, according to Morningstar. The fund had $101 billion in long-term assets at the end of the first quarter, Wells Fargo said. An additional $109 billion was held in money-market funds.