“What the farmer doesn’t know, he doesn’t eat” (German proverb). This old German proverb could also apply to certain investment companies or fund advisors outside of Europe. Often, due to language skills, familiarity with existing structures, or the “foreignness” of particular fund launch designs, foreign asset managers seem to consider interesting decision-making processes when they contemplate market entry in Germany. Information is indispensable: fund structure, regulation, but most of all the distribution opportunities in the German-speaking world are hot topics among the community of international sales professionals and are frequently discussed. How can German investment companies become attractive sparring and business partners at this point? How can a local, on-site partner offer added value in this situation? Luxembourg: Ideal “Hub” for Market Entry in Germany? Luxembourg, Germany, and Investment Companies (“Subsidiaries”) Marketing, Sales, Public Relations: Germany and the Proximity to the Investor Excursion: External Service Providers in Luxembourg and Germany Outlook

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Private Label Funds, Luxembourg, and Market Entry in Germany
By Markus Hill, Independent Asset Management Consultant
(Published only in German, www.finanzen.net)
“What the farmer doesn’t know, he doesn’t eat” (German proverb). This old German proverb
could also apply to certain investment companies or fund advisors outside of Europe. Often,
due to language skills, familiarity with existing structures, or the “foreignness” of particular
fund launch designs, foreign asset managers seem to consider interesting decision-making
processes when they contemplate market entry in Germany. Information is indispensable: fund
structure, regulation, but most of all the distribution opportunities in the German-speaking
world are hot topics among the community of international sales professionals and are
frequently discussed. How can German investment companies become attractive sparring and
business partners at this point? How can a local, on-site partner offer added value in this
situation?
Luxembourg: Ideal “Hub” for Market Entry in Germany?
Luxembourg and UCITS as worldwide brand; accreditation opportunity for Europe-wide sales;
quality and transparency; domestic and foreign investment companies concentrated in one
place; and closeness to German-speaking sales environment – these are all advantages that
many international asset managers appreciate. Potential initiators of private label funds
recognize a first, great contact point in Europe besides locations such as Germany and Ireland.
Technology, implementation, and realization of regulatory requirements: all foreign firms can
discover an immense offer for investment companies and other service providers. What
appears noteworthy though is the area of fact-finding-mission-process when it comes to the
selection of best possible investment companies for the market entry in Germany.
Luxembourg, Germany, and Investment Companies (“Subsidiaries”)
In Luxembourg, a large number of subsidiaries of German investment companies exist.
Talking to different representatives of these companies, it becomes clear that they are often not
the first point of contact for foreign asset managers. Disregarding the accreditation procedures
for Europe-wide sales at this point (regulation for local player is the “same”), this fact seems
rather strange. At least considering the potential German-speaking sales environment, one can
suspect added value in terms of market knowledge (e.g., special funds, Master KAG topic, and
investor contact).
Many foreign funds initiators, whether large asset managers or small funds boutiques, miss out

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on the opportunity to locate an initial, competent person of contact for the market entry into
the German-speaking sales environment. Foreign investment companies may be competent as
well, but it is important to take a closer look at whether there is indeed an interesting network
in Germany or that possible services simply consist of distributing “Cross Border distribution”
handouts. In fact, this sort of action may be sufficient for many foreign firms which at first like
to keep their distance to direct sales activities in Germany. Negotiating sales agreements and
registering platforms are only a small building block in terms of targeted marketing processes.
Marketing, Sales, Public Relations: Germany and the Proximity to the
Investor
In addition to the core skills of investment companies in Luxembourg (administration), there
are other ways in which some of the investment companies may find a good first point of
contact for their market entry in Germany. For one, there are the aforementioned subsidiaries,
but there are also companies that have at least in “real” terms direct or indirect access to
investors. Companies such as Universal Investment, LRI Invest, and IP Concept are well-
known players in the German market. Possible distinguishing characteristics, similar to other
investment companies, could be answers to the following questions:
1. Which services are offered as added value in addition to the “hygiene factor”
administration (e.g., know-how, “complex fund structures,” network, experience)?
2. Are road shows and events being organized?
3. Is there active PR work for the funds initiator?
4. Do they actively pursuit sales to German investors?
Often this point is a given. Many foreign fund initiators with sales focus on Germany,
including Switzerland and Austria (“German-speaking Europe”), are often surprised that the
combination of a quick fly-in from London or another overseas location and the closure of
numerous contracts (platforms, sales agreements etc.) does not replace focused marketing
work. Frequently, the cost of opportunity of non-action with German investors is disregarded:
there are always competitors who complete the task more efficiently, more focused, and better;
they “reap” successful relationships which can in the long run, with the right product quality
(USP, performance) of course, pay off.
Excursion: External Service Providers in Luxembourg and Germany
Luxembourg offers a wider variety of external support in the areas of administration, law
(regulations, accreditations, etc.) as well as in terms of marketing, sales, and public relations.
The realm of service providers, the “consulting entity,” appears to have been much more
multifaceted in previous years than the advising and service entity in the area of asset
management in Germany. At first, many foreigners utilize external resources, and the sector of
recruitment agencies stands out in particular. Over the past few years, Germany has
experienced similar changes. Next to investment companies, support for sales can also occur
through the use of placement agents; this approach, however, is not exactly uncontroversial in
foreign countries. Additionally, a large range of possibilities exists in the field of business
development or “intermediary business development.” Similar to Luxembourg, one finds the
“PowerPoint-slide-consulting” approach as well as the more popular “hands-on” consulting

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approach (service provider with sales contacts). One or the other may be useful for asset
managers who are unable to cover all their bases with company-own resources.
Outlook
The ideal road to market entry in Germany does not exist. Depending on the individual case,
foreign managers likely decide to use appropriate service providers in Luxembourg or
Germany. In fact, a combination of both could be quite interesting: local competence
combined with a network in Luxembourg. One of many possibilities during the decision-
making process could be to address direct or indirect German competitors in the field. This
approach of a fact-finding mission often seems more focused than the possible alternative of
expensive conference attendances or random professional talks. This is one type of company
strategy that repeatedly surprises market experts in Germany. The drafting of a mind map for
development and realization of a successful market entry in Germany should be characterized
by the choosing of appropriate know-how centers such as investment companies. This should
be independent of the extensive beauty contest processes in the provider sector by foreign
funds initiators that may follow as a result. Here, the statement that a good conversation can’t
hurt also applies.
Feedback, additional thoughts, experience or any kind of dialouge on such context is most welcome; please
contact info@markus-hill.com or Mary Daute (Asst. Manager). Phone: + 49 17 66 33 66 094
Markus Hill
Markus Hill (MSc in Economics) is an independent asset management consultant based in Frankfurt, Germany
Professional experience includes SEB Bank and Credit Suisse Asset Management. In addition, he worked as head
of sales and PR for a German fund boutique. Since 2005 he specialized in the management of mandates, sales,
marketing, and PR (consulting, "introducing"). Markus is also involved in selecting themes in the specialist areas
of target funds with a multi-management aspect, fund boutiques and mutual funds for institutional investors
(product scouting, fund selection). Furthermore he is actively engaged in cooperation with the market-leading
Private Label Funds/Master KAG in Germany (Universal-Investment) promoting the idea of independent asset
management and was the Co-Initiator of the first all-German Consultant survey in 2005 and the first "UCITS-
survey" in 2003. Market entry into Germany, behavior of fund selectors and fund providers in German asset
management industry are often discussed by him, e.g. in his asset-management-publication MH-Focus. Through
many articles, columns and presentations (national and international) he has become a highly recognized expert in
the German asset management industry. "Industry multiplicator" is a term often used by journalists and clients to
describe his style and personality.
(Markus Hill/ MH Services assigned in the role of Media Partner for: UCITS Alternatives Conference in
Zürich, September 2011)
Markus Hill MH Services
email: info@markus-hill.com
website: www.markus-hill.com
phone: 0049 (0) 69 280 714 mobile: 0049 (0) 163 4616 179