CBRE Global Multi Manager, the indirect arm of CBRE Global Investors, is changing its name to CBRE Global Investment Partners. It could be construed simply as another case of rebranding, but perhaps it should not be overlooked.
The fund-of-funds and multi-manager business has enjoyed a bit of a renaissance in recent years. It always had its critics, whose chief complaint was its double layer of fees (investors would be charged by the fund-of-funds manager and by the underlying fund investments).
It was thought the financial crisis might act as a catalyst in the demise of the sector as investors learnt lessons and revised their approaches. But it didn’t. Last month, CBRE Global Multi Manager said it raised more than $1.1bn (€849m) since the start of the year.
This line of thinking was also applied to the traditional funds business as investors began to eschew pooled funds in favour of club deals and joint ventures. In retrospect, it proved to be a short-term phenomenon, but it was driven by some very real dissatisfaction with the fund model – namely a lack of control, misalignment (with both managers and investors) and fee structures.
Joint ventures and club deals resolve these issues: investors are closer to the investments and the decision-making; fewer parties make alignment more manageable; fees are commonly lower. The approach comes with its own drawbacks, not least the extra resources and governance required.
It is also the preserve of larger investors. But large pension funds and sovereign wealth funds are not alone in going down this route; multi-managers have also followed – potentially offering the benefits to smaller investors.
Fund-of-funds and multi-managers are increasingly moving away the traditional activity associated with them: investing in funds. As well as joint ventures and club deals, they have also moved into buying into existing funds and portfolios at discounts on the secondary market – known colloquially as ‘secondaries’.
For this reason, it might be that the sector is finding that its name has become a outmoded and ripe for a rebrand.
Jeremy Plummer, CEO of the renamed CBRE Global Investment Partners, said: “For many people, the term multi-manager has just meant fund of funds.
“As our investment approach expanded, we realised we needed a name that conveyed not only our global investment scope but also the breadth of investment vehicles that we utilise.”
The approach of the modern multi-manager is comparable to that of Partners Group, a company that has always shunned the term. Partners Group invests institutional capital in a way that co-head of real estate Claude Angeloz has described as “agnostic”, investing in funds, secondaries, joint ventures and direct deals, depending on where and how opportunities arise.
“We are global integrated real estate managers,” Angeloz told IP Real Estate back in 2010. “We believe that if you restrict yourself to a pure fund-of-funds or multi-manager approach, and you only look at newly launched funds, you miss out on a lot of other opportunities.”
This begs the question: should CBRE Global Multi Manager been subsumed into CBRE Global Investors to make it a more holistic shop? CBRE Global Investors has made it clear that the two parts of the business will remain distinct.
“The key point of differentiation from the direct business of CBRE Global Investors is that we always invest with operating partners, so we also reflected this in the name,” Plummer said.