GM To Drop Name From Asset Management Arm
16 März 2009 - 12:30PM
Dow Jones News
General Motors Corp. (GM) is making another push to market its
asset management services to other companies by dropping its name
from the in-house unit that already oversees $132 billion in
funds.
The auto maker said Monday that it will re-brand General Motors
Asset Management, or GMAM, as Promark Global Advisors, Inc. in an
effort to win more external business alongside its oversight of
GM's own pension plans for employees in the U.S., Canada and some
other countries.
GM accounts for around 80% of managed funds, with outside
employee benefit plans, foundations and other clients making up the
balance.
The move comes eight years after GMAM first moved beyond
managing money for the auto sector - it still has the account for
bankrupt parts maker Delphi Corp. - by winning a contract to
oversee funds for Xerox Corp. , the copier maker.
"GM remains our largest client and we expect the company to
continue to be a vital part of our business," Nancy Everett,
Promark CEO and chief investment officer, said in a statement
Monday. "The experience gained through this relationship enables us
to bring a unique perspective and commitment to managing the plan
assets of other firms, a fact we are highlighting with the new
brand."
While its Promark funds earned a reputation for low costs and
relative outperformance, GMAM has faced tough competition from
established fund managers and consultants seeking business from
companies outsourcing the oversight of employee pensions.
GMAM earned a reputation as one of the first and most aggressive
corporate entrants to seeking outperformance through alternative
investments, notably hedge funds. However, it sliced the percentage
of funds in alternatives to 6% at the end of 2008 from 13% a year
earlier. Most of the switch was into bonds, its largest asset class
at 61%, according to a regulatory filing by GM. Equities accounted
for 24% and real-estate for another 9%.
The re-branding exercise represents a marketing about-face for
GMAM, which had previously highlighted its relationship with the
auto maker as a strength. Marketing material on its Web site noted:
"The investment programs offered to our clients are the same ones
in which GM's benefit plans participate." Some of GMAM's senior
executive team, including its CFO and chief operating officer,
joined from GM or its GMAC financing arm.
Everett, who joined the company in 2005, has said in the past
that GMAM was not being run as a profit center. A GM spokeswoman
said the auto maker has no plans to spin the company off as a
separate entity.
The shrinking band of defined-benefit pension plans in the U.S.
withered under the collapse of equity and other asset prices last
year, leaving GM's plan underfunded, though GMAM claims it
outperformed peers.
GM last month said its U.S. pension commitments for hourly and
salaried employees are underfunded by $12.4 billion, a reversal
from an overfunding of $18.8 billion a year earlier.
GMAM funds, many of which are outsourced to external managers,
lost 11% last year. It said comparable funds lost 20% to 25%.
Milliman Inc., a pension consultant, said the largest 100 U.S.
defined benefit plans swung from an average overfunding of 4.9% at
the end of 2007 to being underfunded by 22.8% by the end of last
year.
The New York-based group, wholly owned by GM, employs about 140.
Under the name change, General Motors Trust Bank, N.A. will be
known as Promark Trust Bank, N.A.; and the funds it manages with
Promark Global Advisors are called the Promark Funds.
(Doug Cameron contributed to this article)
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com.