On Rose Monday, one of the most successful partnerships in the fund industry came to an end. The Frankfurt-based asset management company Acatis, led by Hendrik Leber, terminated its partnership with the consultancy firm Gané, founded in 2008 by Henrik Muhle and Uwe Rathausky. This concerns the Acatis Value Event Fund, an 7.5-billion-dollar mixed fund. A product that generated an administration fee of 106.3 million euros in the past fiscal year (as of September 30), which both sides shared.

Gané expresses incomprehension. "Both sides benefited from the partnership for many years. We received numerous awards. For Acatis, our fund was the ticket to growth and internationalization", says Rathausky.

"Self-aggrandizement" is how Leber characterizes the behaviour of their long-time partner. "Recently, there has been a public impression that Acatis is no longer involved in the fund. In reality, we have worked hard for the fund for 15 years", states the Acatis CEO. His firm is the investment management company (KVG) and thus the fund's manager.

"The fact that the fund has reached a volume of almost 8 billion euros is not an achievement made solely by three people from Gané." In addition to Muhle and Rathausky, the third member at the Aschaffenburg-based Gané is capital market strategist Marcus Hüttinger. The longest connection is between Leber and Muhle, who worked at Acatis as an analyst and fund manager from 2002 to 2007 before becoming self-employed.

The dispute over the billion-dollar fund has significant implications. As per the rating agency Scope, the Acatis Value Event is of immense importance to both Acatis and Gané. Acatis manages assets worth 13 billion euros, making the Acatis Value Event Fund account for approximately 60% of its assets.

"For Gané, the Acatis Value Event plays an even larger role," according to Scope. Besides this heavyweight, the company is responsible for only two other funds totalling 206 million euros. "The Acatis Value Event Fund thus represents almost the entire assets under management by Gané."

"The Trigger" for the termination was the launch of a fund that Leber sees as a replica of the Acatis Value Event. "A product with the same people, the same history. That alarmed us because it's a full frontal attack on us." There was apparently no open communication in the months leading up to this. "We only learned from the press that Acatis terminated our partnership. Until the end, we had planned joint sales events and appointments with the Acatis colleagues for 2024", Gané states.

Leber counters that they were not informed about the launch of Gané Global Balanced either. "Therefore, I saw no obligation to inform them in advance about our termination." A change of fund manager is not uncommon in the industry. "When well-prepared, a successful strategy can be continued. The fact that the previous management was abruptly dismissed indicates that no preparations were made," evaluates Ali Masarwah from the Envestor fund platform. As per Gané, customers have now been unnecessarily forced to choose whether to stick with the existing fund, switch to one of their funds, or exit altogether. "This is an unbearable situation."

Following this step, Acatis anticipates a decrease in volume. "I understand that some customers are upset. But we now have more money available to support sales", says Leber. Since Acatis is cutting ties with the consultancy firm, it can collect the entire management fee. Even if large sums are withdrawn, it could still be worthwhile.

From Masarwah's perspective, there are several reasons against a mass exodus. "One factor is the inertia of the masses, especially since many investors may not be aware of the change in fund management. Furthermore, financial service providers are incentivized to deter clients from switching by increasing the trailing commission for the Acatis Value Event Fund", Masarwah explains. According to him, banks and other financial service providers will receive an annual trailing commission of 0.6% instead of the previous 0.4%.

There was a conflict a few years ago over the fund's name. Acatis sought to protect the brand "Acatis Gané Value Event" at the trademark office – the fund's former name. Years ago, an extortionist had registered the name Acatis and issued a warning to the company. "As a result, we had all our fund names protected. This is legitimate; as a KVG, we must protect the brand," explains Leber.

But Gané had registered the company's word mark in 2011 and opposed the protection of the fund's name. As a result of Acatis's efforts, the name Gané was removed.

"We were, of course, willing to find a mutually agreeable solution both before and especially after the fact, and actively approached Acatis. In the course of this, we offered extensive concessions to reintroduce Gané into the fund's name", says Rathausky.

As for what happens next after the fallout, the parties involved have different views. They are likely to agree, however, that lawyers will now be involved. A lengthy legal battle is expected.

As per Acatis, nothing will change for existing clients. "The investment concept of the Acatis Value Event Fund is not difficult to continue. We have the toolbox for it. And we have practical experience with large mandates", clarifies Leber. The goal of achieving equity-like returns with lower volatility will continue to be the trademark. The "straight line" strategy with a portfolio of quality companies and predictable cash flows will remain unchanged.

The long-time advisor strongly doubts this. In an online conference on Wednesday, Muhle pointed out that the investment concept was not replicable and was originally developed by Gané. The model is unique in the German-speaking region. "If the Gané system were that simple, others would have copied it long ago", adds Rathausky. Scope views a manager change in a successful fund critically and places the product under special observation internally. "In this case, the abrupt change appears to be a particular drawback", reads the report.

To offer investors a product comparable to the old fund, Gané Global Balanced will be converted to the proven concept and renamed Gané Value Event Fund, reports Muhle. This fund name had already been registered as a trademark in April 2020, following the trademark dispute over the Acatis-Gané funds.

The case highlights the relationship between fund companies, asset managers, and consultants and initiators. The construction of a fund advisor under a liability umbrella (as was the case here), which submits investment proposals to the KVG, is viewed by Volker Schilling as a "circumvention offence". This view is at least taken by the board member of Greiff Capital on the online portal "Fonds professionell".

Schilling compares the construction to opening a bakery without a master's certificate. "You then make use of a bakery liability umbrella that employs a master and open your bakery underneath." The question is who controls whom. Clarifying these "circumventions" has long been necessary. An appeal for greater clarity for many participants in the fund business and their relationships. Nonetheless, until something changes in this regard, perhaps the war of roses between Frankfurt and Aschaffenburg will also be settled.