Hendrik: You joined Janus Henderson in 2022. What did you find?
Ali: At the core of the business were three attributes. First, very strong investment acumen. However, some of our franchises were not as known across the world as they should have been. Second, top-notch client service and deep relationships. But we should have more clients. Third, great infrastructure, including risk, compliance and governance teams and processes.
Hendrik: What have been your priorities?
Ali: Protecting and growing our core businesses was key. Then amplifying our strengths, within specific areas of equities, fixed income and real estate, for example. Finally, diversifying into new areas. Recent additions include expertise in emerging market debt and emerging market private credit, and we have expanded our exchange-traded fund (ETF) offering.
Hendrik: There is a clear tax rationale for investing in ETFs in the US, but that’s not the case everywhere. Why move into ETFs?
Ali: In the US, ETFs are indeed a tax-driven story. But there are other ETF features that are important for some clients, such as intra-day trading and more transparency of holdings. They can also offer lower costs to investors, and for asset managers they can be low-cost to run (the margins are about the same). They don’t fit every region or client need, and mutual funds have distinct advantages for some types of investment strategy. Simply, different wrappers will suit different clients and geographies. Ultimately, what matters is the quality of the investment strategy inside the wrapper.
Hendrik: We both agree that it is becoming increasingly relevant to investors for an asset manager to offer access to emerging markets. Why was the developing world a focus of your early acquisitions?
Ali: Simply because that is where the puck is moving. Not so many clients are pulling the trigger on investing in emerging markets yet, but we are seeing a lot of interest. In emerging market debt, for example, there is recognition that a careful and selective approach to capitalising on discrepancies can generate alpha. And private credit is a vast and untapped opportunity in emerging markets, where there is huge entrepreneurialism but financial systems are not as developed.
Hendrik: The US has experienced an extremely rapid rise in interest rates, which many emerging markets have avoided. How has this changed the environment for investors and the asset-management industry?
Ali: It has brought about a dramatic change of mindset among investors and advisors. For more than 10 years, there was no cost of capital and a rising tide lifted all boats. That made passive investing a reasonable bet. Today, the world is very different. Increasingly, there will be a different cost of capital for good companies and bad companies, and that will result in alpha. We are seeing the more sophisticated family offices and sovereign wealth funds already shifting towards active, and others will follow.
Hendrik: How do you see the shift to a multi-polar world affecting your business?
Ali: The challenge is to figure out how to invest in a much more complex world. Tariffs, breakdowns in supply chains and significant changes in geopolitical alignment are all adding complexity. It is also becoming more challenging to run a global business. But in the end, the investment management industry boils down to one thing: delivering outcomes for your clients.
