Purple, which launched in Singapore in September, provides outsourced chief investment officer (OCIO) services under the Global CIO Office brand.
The firm aims to grow assets under management to $1bn in the next 18 months from $300m today, Gary Dugan, CEO, told FSA.
Targeted clients are mainly single and multi-family offices with assets of at least $30m. Currently the firm has five clients, though Dugan declined to name them.
In essence, the OCIO firm can develop and manage a client’s portfolio for firms and family offices. “We sit in Singapore, but this office is looking for clients not just here in Asia but also in the Middle East and Europe.”
While the firm is aligned with the growth trend of family offices in Asia, as a newcomer it will need to establish a track record – and competition is strong.
For example, Mercer and Willis Towers Watson, which have offices across the region, have been providing outsourced CIO services for years. They mainly serve institutional investors, but both firms are well aware of the opportunity with Asia’s growing number of family offices.
Family office complexity
Moreover, outsourced investment services can be a very complex business. Family offices vary widely in size, needs and structure and often face a trade-off.
Outsourcing advantages include reduced costs and overhead and objective advice from experienced professionals.
But FOs may not want outsourced services. Basic asset allocation decisions may be better done in-house. The family then gets direct control and confidentiality over family wealth and can develop investment-related skills specifically tailored to the family’s specific needs.
Moreover, an OCIO business may be partial and short-term: a family office client may outsource some services initially, only to pull the functions in-house as it grows.
Purple has few resources compared to the plethora of big name banks and other advisories offering outsourced investment services.
Nonetheless, Dugan said they haven’t had problems getting access to portfolio managers of the funds they are interested in. Fund selection is done across 2200 funds globally, he said. The team has actively invested in 42 funds and reviews the focus list on a weekly basis.
He sees an advantage in the network of contacts his team of six has built. Dugan previously held senior investment roles at JP Morgan, Merrill Lynch, Barclays and Coutts. Johan Jooste, managing director who joined the firm in August, was formerly CIO at Bank of Singapore.
“They may not have heard of the Global CIO Office, but they would have heard of me and Johan”, he said.
One difficulty is choosing when Purple itself decides to outsource services to a third party. “If someone would like foreign exchange and trading services, we would probably say no because it would need too much dedication. However, we might work with a trading platform which we would pay for as a resource.”
Fragmenting industry
Meanwhile, the trend of senior employees leaving private banks to set up their own wealth management operations continues in Singapore, according to Jooste.
In Singapore, he said around half a dozen bankers have broken away from the big banks over the past six weeks.
“We know them and we speak to them, but this is an extremely confidential issue.”
As these new independent firms ramp up, they are potential clients of Purple, which provides investment services at lower cost than private banks, he said.
He sees OCIO services following the growth pattern of the US and Europe, reflecting the changing industry landscape in Asia. “The industry is fragmenting very quickly,” Jooste said.
