Generali has announced the launch of Aperture Investors, a new asset management company that relies on a disruptive revenue model, to be led by Peter Kraus, former Chairman and Chief Executive Officer (CEO) of AllianceBernstein and Global Co-Head of Goldman Sachs’ Investment Management Division.
The Italian insurance giant will contribute up to $4 billion of strategic investment capital to Aperture, which is to operate using a unique revenue model, charging ETF-like fees that are raised when managers beat their benchmarks.
Similarly, managers will be paid a modest base compensation and can only earn more when they generate outperformance, while a deferral mechanism will ensure that unearned compensation is returned to Aperture’s clients.
“Aperture Investors is another important milestone in Generali’s multi-boutique strategy launched last year,” said Tim Ryan, CEO of Generali Asset Management. “We believe that innovation is not only a key lever for our long-term success but also an opportunity for Generali to guide the process of change as a leader in the insurance and financial industry.”
“Aperture Investors offers us the ability to develop a new model that addresses manager incentives while also leveraging invaluable know-how in our sector,” Ryan continued.
Carlo Trabattoni, Head of Generali Investments Partners, also commented: “Peter Kraus has a twenty-year history of successfully leading global financial organizations and the ability to inspire and attract talent eager to transform the business of asset management.
“The total AUM in the world amounts to well over $ 84 trillion, many active managers are underperforming and passive indexing is growing. With Aperture, we want to combine the interest for passive with the need for active.”
Kraus, who has been appointed Chairman and CEO of Aperture Investors, added: “Asset management is an industry long overdue for disruption. There are currently too many active managers managing too much money. Fixed fees and a lack of real capacity constraints have long incentivized managers to grow assets under management rather than pursue outperformance.”
“This structure has led to years of poor performance that has eroded client trust in active management,” Kraus explained. “We intend to change this by aligning manager and client incentives around outperformance. We do this by charging fees that are similar to passive ETFs when performance is at or below a stated benchmark – and we only charge more when we generate outperformance.
“It’s our belief that investors would rather pay for performance than pay regardless of whether or not they get any, and the only way to do that is to disrupt the long-held model of fixed fees based on AUM in asset management.”
