Interviews, video and special reports
InvestmentEurope editorial director Jonathan Boyd discusses the contents of this guide to the French fund market
A bright future beckons for the French AM industry plus a snapshot of French selectors’ habits
Exclusive video report from AFG headquarters in Paris
14 fund selectors offer their opinions on a diversity of topics
The SF2 chairman talks about the challenges facing French fund selectors
The first InvestmentEurope Frabelux Forum, held at the Hotel Ritz, Paris
Interviews and Tweets from the Frabelux Forum
Paris seeks a neighbourly transition
AFTPM president Eric Bonneville highlights current trends in this growing market
“France has been anything but standing still in the current environment, challenging the margins of both sell and buy side businesses”
Jonathan Boyd, editorial director of InvestmentEurope
As one of Europe’s key fund markets, France has been anything but standing still in the current environment, challenging the margins of both sell and buy side businesses.
The country has been marking its place as a top source of ESG/SRI implementation while implementation of blockchain and artificial intelligence benefits from government support.
As such, this ezine features an exclusive video with Pierre Bollon, head of European and International Affairs at the French Asset Management Association (AFG), including future goals and expectations.
Philippe Serica, chairman of the recently launched Association of French Fund Selectors (SF2), gives his views of developments on the buy side, while further viewpoints are put forward by individual fund selectors.
There is also a special report from InvestmentEurope’s Frabelux Forum 2018.
Paris’ approach to Brexit and its aims to take share of Europe’s fund market are also covered, alongside a review of trends in the market for third party funds.
Jonathan Boyd, editorial director of InvestmentEurope and PPA Independent Publisher Awards 2017 Editor of the Year
Key French AM trends
French asset management trends
The French asset management industry managed €3.99trn of assets and constituted some 630 companies licensed as of 31 December 2017. Adrien Paredes-Vanheule presents the French market’s latest trends
French asset management representative body AFG reported some €3.99trn of assets were managed locally as of 31 December 2017.
AFG’s data suggests that since 2011, the last time a decreas4e assets drop was seen in the French asset management industry, records are being hit year after year. AUM have soared by 44.3% between 2011 and 2017 with an annualised growth of 6.3%. For the full year 2017 alone, they increased by 6% year-on-year.
In 2017, a 7.3% yoy increase was stressed in net inflows of France-domiciled funds (+€130.5bn of net new money over 2017) to reach €1.92trn of assets under management, split as following : €874bn in Ucits funds (up +9.8% in comparison to December 2016) and €1.05trn in alternative investment funds (+5.2% yoy).
Equity, bond and diversified Ucits funds have gathered around €50bn in net new inflows over 2017. In detail, France-domiciled equity funds posted €11bn in net new cash last year (+16.3% yoy) while fixed income and diversified funds have reported increasing net inflows of €26.4bn (+10.6% yoy) and €12.3bn respectively in 2017.
AFG observed that inflows recorded by France-domiciled equity funds last year hit a level unseen since 2011 and that new money in the fixed income segment has been poured primarily into short duration bond strategies.
Money market funds, representing a quarter of the French asset management industry’s total assets, have faced outflows of €1.1bn (-0.3% yoy) in 2017. AFG specified that AUM of traditional money market funds have increased by 1% last year while these of short-term money market strategies dropped by 6.8%.
Assets managed through mandates for French clients were mostly invested in fixed income products for insurance clients and increased by 3% to €1.65trn according to AFG’s data.
In addition, assets managed in foreign funds in France have exceeded the €400bn mark. The French AM association suggested this results from the strengthening of distribution capabilities towards non-French residents clients by a number of asset management companies.
FIRST MARKET IN
The French AM body highlighted that France had an 18% market share in the European asset management market just behind the United Kingdom (24%) and before Germany (15%). When adding mandate management figures, France remains the first continental Europe market of the asset management industry.
Assets under management of funds domiciled in Europe have reached the level of €15.62trn at the end of 2017.
Regarding fund domiciliation, France ranks second for alternative investment funds in Europe (17.9%) behind Germany and before the Netherlands while it stands in fourth position for the domiciliation of Uctis funds (market share of 8.9%); Luxembourg, Ireland and the UK leading the rankings.
Euroclear France, in partnership with management consultancy Ailancy and a number of French financial services players including asset managers, has issued 16 recommendations in a report released in April 2018 to increase attractiveness and competitiveness of the French fund distribution model.
Opportunities for the French fund market highlighted by the report were in the areas of anti-money laundering (AML), know your customer and direct distribution as well as in these of transparency and development of cross-border distribution.
Euroclear prioritised its recommendations, seven of which being considered as urgent and unavoidable needs to address to ensure the attractiveness and performance of the Paris marketplace by the clearing house.
- Establishing a Paris marketplace Know Your Customer infrastructure of international dimension on the French markets with the aim of optimising the KYC process and costs
- Enabling portability of investor KYCs when the investor is already client of a French financial institution
- Providing asset managers with a better knowledge of their investors by using new technologies such as blockchain with the objective of increasing transparency along the distribution chain.
- Opening the Euroclear France order routing platform to financial intermediaries that are not Euroclear France members.
- Promoting the distribution of funds via new technologies (roboadvisors,…) by simplifying the transmission of direct subscription / redemption orders
- Ensuring interoperability between Euroclear France and the Blockchain register(s) in which the funds are circulating.
- Defining a standard between account holders and new forms of blockchain registers to provide the investor with a consolidated view of his holdings
Euroclear also recommends the drop of the obligation to retain physical documents as enshrined in the anti-money laundering law when the subscription comes through a French financial intermediary and the possibility to inform shareholders of fund changes through electronic shareholders notices or on a website.
The number of asset management companies licensed in France remained identical from to 2016 to 2017 with 630 firms numbered. Some 35 asset managers have been granted AMF’s agreement in 2017 while 35 lost it.
French financial markets regulator said more than 63% of agreement withdrawals in 2017 were consecutive to consolidation while these following a business failure accounted for 20% of the AM licenses withdrawn (seven managers).
Nine of the 35 companies shut down last year because of the change in the French law regarding the status of asset management companies, that distinguishes asset managers from investment firms.
Regarding company launches, the French regulator notes that 66% of them (23 over 35) were private equity or real estate firms. Sophisticated asset managers, in particular these using a quantitative approach, formed 20% of the licenses granted by AMF. The remaining 14% were traditional asset management firms.
Overall, entrepreneurial boutiques formed around two thirds of the French AM landscape at the end of 2017. AFG noted that 80 asset managers managed between €1bn and €5bn of assets, 48 had between €5bn and €50bn in AUM while 14 were managing over €50bn at the end of 2017.
“Assets growth is concentrated on a few large companies. We feel the will of the French asset management industry to go global,” observes Bertrand Gibeau, partner and head of Business Development at Paris-based advisory and consulting firm Reinhold & Partners.
“The trend is also visible in asset management companies that have assets under management below €10bn. The issue dwells in the choice of the structure and vehicles to pursue expansion plans outside France,” Gibeau, adds.
OPERATING PROFITS DOWN,
OPERATING LOSSES UP
Though the picture is not all bright for French asset managers as the industry is facing a slump in operating profit (-8.1% yoy drop between end 2015 and end 2016 according to AMF).
The regulator explained operating profit declined because of a rise in operating costs and a drop in operating revenue.
Some 22.7% of French asset management companies have faced operating losses which have totalled €102m for the whole year 2016 (against €87m in 2015).
“Assets growth is concentrated on a few large companies. We feel the will of the French asset management industry to go global. The trend is also visible in asset management companies that have assets under management below €10bn. The issue dwells in the choice of the structure and vehicles to pursue expansion plans outside France”
Bertrand Gibeau, Reinhold & Partners
The share of asset managers reporting operating losses has not yet reached levels seen after the financial crisis of 2008 (25,3% in 2011).
AMF underlined that disparities were visible between asset managers facing operating losses. More than three in four companies (76.1%) that reported so, are entrepreneurial boutiques.
Among French managers having recorded operating losses in 2016, 40.9% of them had less than four years of existence.
The figure is on the rise, said AMF explaining it by more local and international competition as well as by the consolidation trend seen in the market. That said, only 18.3% of managers established more than 15 years ago have reported losses, that share having dropped from 28% in 2011.
PENSIONS SAVINGS REFORMS
What is on the plate for the French asset management industry in 2018, other than its ongoing consolidation? First, the forthcoming emergence of pension schemes “à la française” embedded in the French government’s bill called “loi Pacte”, aimed at financing the growth and transformation of small and mid-sized enterprises in France.
A study on France’s asset management trends in 2018 released by Deloitte highlighted that as of 2017, 58% of French households’ total assets (estimated at over €11trn) were in real estate and the remaining 42% in financial assets.
Traditional euro-denominated funds with guaranteed capital contracted through insurance life platforms lead the way (31%) despite net returns plummeting for most of them; deposits follow (18%).
Overall, Deloitte’s data shows only 5% of the 42% French households holding financial assets in 2017 were invested directly in Ucits funds while unit-linked contracts on insurance life platforms only represented 6% of French households’ financial assets.
The use of a third pension savings pillar (in addition to basic and supplementary retirement provision) remains something of a rarity in France but it is set to become ever more crucial because of growing demographics pressures and the increasing imbalances within the French retirement system.
AFG explained this allocation to euro-denominated funds via insurance life contracts and real estate has resulted in two main issues, the first being the low level of indirect or direct equity holdings by French households (13%) and the second lying in the amount of flows poured into real estate either through estate acquisition or mortgage repayment (estimated 80% of French households’ annual flows).
This does limit households’ capacity to develop a long-term sustainable savings strategy, specifically these engaged into property mortgage repayment according to AFG.
The recent implementation of a unique 30% flat tax on capital and a new wealth tax covering only real estate assets are due to resolve these issues, the French AM representative body said.
Lastly about pensions, French president Emmanuel Macron announced a draft bill for the French pension system reform will be ready by summer 2019. Also a new stricter investment framework came into force on 1 January 2018 for 18 French pension schemes managing assets of “liberal professions” and relying on a pay as you go model.
ESG/SRI investments perking up forms another trend to monitor within the French asset management landscape. In recent years, France has shaped itself an edge in this field. Examples include the article 173 of the Energy Transition Law passed in 2015 setting out reporting obligations for institutional investors, the Paris agreement signed during the COP21 in December 2016 or the setup of French authority backed SRI and TEEC labels.
The latest development in the SRI/ESG field has been the ambition set by La Banque Postale Asset Management (€217bn of AUM as at end 2017) to convert the totality of its clients assets into SRI assets by 2020.
Invited to pick one out of ten questions on various themes related to asset management in France, a number of fund selectors interviewed for this edition have chosen to comment on green investments.
Deloitte’s study on asset management trends observes thematic and green strategies predict asset managers will necessarily turn green with extra-financial criteria taking over financial analysis through the development of new tools and skills. More investments will be conducted in the field for research, selection criteria and processes, Deloitte believes.
How to preserve the French edge in the green investment field? Deloitte’s Pascal Koenig, responsible for the coverage of asset management, gives a few leads: reducing filters and increasing impact, favouring extra-financial rating in portfolio management, implementing, anticipating further obligations.
A last trend to watch for in France deals with technology. Prior to Euroclear's recommendations on the use of blockchain for fund distribution, Ostrum AM and BNP Paribas AM were among French pioneers to have completed blockchain fund transactions.
Another major development, that occurred in September 2017, has been the launch of a fund-record keeping platform that relies on blockchain technology called Iznes by a quartet of Paris-based asset management companies – OFI AM, Groupama AM, La Financière de l'Échiquier and Arkéa Investment Services – together with SETL.
“I want my country to be the place where this new perspective on AI is built, on the basis of interdisciplinarity: this means crossing maths, social sciences, technology, and philosophy. That’s absolutely critical”
French president Emmanuel Macron
The platform aims to provide investors, asset managers, distributors and wealth management advisers with easy access to fund units.
Among others, Iznes enables firms to manage KYC processes, handle subscription / redemption instructions, and settle transactions and record positions.
Moreover, developments are expected in the field of artificial intelligence following Emmanuel Macron’s announcement of a new national strategy on AI.
“I want my country to be the place where this new perspective on AI is built, on the basis of interdisciplinarity: this means crossing maths, social sciences, technology, and philosophy. That’s absolutely critical,” he said in an interview to tech-focused publication Wired.
This may impact the local asset management field, whether on the quant or on the research side.
A snapshot of French selectors’ habits
InvestmentEurope has partnered with financial services market
research firm Bdifferent for a pan-European fund selector study
whose results were released in March 2018.
Adrien Paredes-Vanheule analyses its findings for France
Bdifferent has surveyed 350 fund selectors between end-November and mid-December across the following markets: Benelux, France, Germany, Italy, Nordics, Spain and Switzerland.
The study was conducted for the third consecutive year.
A number of topics were covered by Bdifferent’s research, first of which being the most important considerations of selectors in their fund picking.
Reliable administration, performance track record and investment risk management philosophy were the most quoted considerations by the 350 fund selectors interviewed across Europe.
The research firm noted selectors’ consideration has been growing for a few factors such as asset managers’ financial strength, relationship management, product range and social responsibility, while selectors’ consideration for the quality of investment insight pieces and marketing material dropped.
Though French selectors views differed from trends seen in Europe since 98% of the French panel have chosen asset managers’ clear and distinct investment philosophy as the most important consideration in their fund picking, followed by reliable administration (94%), relationship management and quality of investment insight pieces (both 92%).
OLD, SAME OLD
Some 82% of French fund selectors interviewed expected their allocation to active asset managers to remain unchanged in 2018, more than in any other European region surveyed.
Those likely to reduce their allocation to active managers formed 8% of the French respondents while 6% said they were expecting to increase by one or two the number of active managers in their selection. Only 4% expected to add three or more active managers to their existing panel.
Allocation to active funds in 2018 would stay the same for 74% of the French respondents (against a mean average of 60% for all fund selectors surveyed).
One in five French selectors (20%) said they were looking to up their allocation to active funds this year while 4% said they would decrease it and 2% remained undecided.
Allocation to passive funds dropped to an average 10% (against a mean average of 12% for all fund selectors surveyed). among French selectors surveyed against 12% in 2017. 60% of them said their passive allocation would stay similar in 2008 while 32% were looking to increase it and 4% to decrease it this year.
PLEBISCITE IN FRANCE
Answering to the question “When you think of asset management providers, which one company comes to mind?”, European fund selectors quoted BlackRock (32% of the mentions), JP Morgan (16%), Fidelity (14%). Two French firms made it in the top 10, Amundi (10%) and Carmignac (7%).
Looking at the answers of French selectors, Amundi led the rankings (40% of mentions) followed by Fidelity (26%) and BlackRock (18%). Paris boutique Moneta Asset Management came in fourth position (12%) while Carmignac, BNP Paribas and AXA IM equally shared the fifth rank (10%).
The three companies seen as the top asset management firms for passive funds in France by the local selectors surveyed were Amundi (46%), Lyxor (30%) and BlackRock (12%). However, in the ETF bucket, Lyxor overtakes Amundi and iShares in French selectors’ opinion.
Amundi came as number one on the mind of French fund selectors in a number of active funds categories, including global equities, global bonds, European equities, sovereign bonds, multi-assets, commodities or income.
Emerging market specialist Comgest ranked first for the emerging markets, Asian, Japanese and Chinese equity funds.
In the absolute return universe, Exane was considered the leading asset manager in France, according to Bdifferent’s study while BDL Capital Management came first in the liquid alternative bucket.
Fund factsheets (80%) and asset manager events (77%) are still on top in terms of being most useful for researching companies, however scores have dropped”
InvestmentEurope/Bdifferent European Fund Selector Syndicated Study, March 2018
Tikehau Capital and Natixis shared the top position in French selectors views for the infrastructure segment.
FUND RESEARCH: E-MAIL NEWSLETTERS ON THE RISE
Another part of the research focused on the communications means used by European selectors for fund research.
“Fund factsheets (80%) and asset manager events (77%) are still on top in terms of being most useful for researching companies, however scores have dropped. Whitepapers and email newsletters have seen growth, printed communications has reduced,” summed up Bdifferent.
Again France diverged from its neighbours since 94% of French fund buyers surveyed assessed asset managers’ websites remain the most useful mean for fund research while 93% quoted email newsletters of asset managers, the highest rates recorded among European regions studied.
Email newsletters from industry media and attendance to industry events such as those of InvestmentEurope were considered useful for fund research by 62% and 79% of the French respondents respectively.
As for the use of social media, Bdifferent’s research pointed out that Linkedin remains the social platform that is the most used in a business capacity for 71% of the European fund selectors surveyed, before Twitter and YouTube.
88% of the French fund buyers interviewed said they were using Linkedin in a business capacity while users of Twitter and YouTube, for same purposes, gathered 24% and 16% of the respondents respectively.
VIDEO REPORT: AFG's Pierre Bollon speaks out
Pierre Bollon, AFG
In this special video report Gary Robinson visited the Paris headquarters of the Association Française de la Gestion financière (AFG) and met with Pierre Bollon, general representative and head of European and International Affairs to discuss the state of the French asset management industry today.
In this video Bollon discusses the position of Paris as a financial centre as it vies with London for post-Brexit business and highlights some of the biggest challenges facing French AM companies.
“Post Brexit, we do not think, in France, that there will be a dominating financial centre but rather multiple leading financial centres, including Paris. We will not replace London by an onshore London.”
Selector views on the French AM industry
14 fund selectors share their views on a variety of topics
around the French asset management industry
Name: Isabelle Tillier
Title: Head of Fund Research
Company: FundQuest Advisor
Do you expect French asset managers to do more regarding green investments?
The green funds market is driven by the countries which pioneered responsible investment promotion, such as France which experiences strong growth.
The majority of European green funds are equity funds, but the market is gradually diversifying, in particular with the emergence of green bonds funds since 2015. The future seems to be about moving to a full ESG (Environmental, Social and Governance) process across all portfolios.
In this context, France actively participates in European efforts to promote green finance, particularly on sustainable development, as well as in the B20/G20 efforts, including adapting international financial regulations.
In line with this trend, FundQuest Advisor (FQA) incorporated ESG analysis within its recommendations of funds and asset management companies since 2013. FQA has set up a proprietary ESG fund rating methodology which has been applied to all its recommended funds since 2014.
Name: Lucas Strojny
Title: Head of Discretionary Mandates and Fund Selection
Company: Advenis Investment Managers
What is your view on French asset management boutiques?
The French asset management market features a unique pool of skills that lies greatly in the entrepreneurial mindset of its managers and in the boutique culture.
As the sector continues to moult, the current consolidation cycle should continue and affect more massively small-sized asset management players that face both the weight, ever more heavier, of regulation (Priips, MifidII…) and reduction in margins in order to adopt fees in line with international standards.
Name: Nicolas Moussavi
Title: Head of Mutual Fund Selection
Company: Lyxor AM
How would you describe the needs of the French institutional market regarding fund selection?
Needs are definitely growing in this area. Why ? More products, more complexity, more regulation. Without counting the low-rates context, high markets valuations & geopolitical risks.
Institutionals have to deal with things like portfolio management, ALM/LDI, manager selection, transparency, and price negotiation as well. The fact is that it’s difficult for some institutionals to drive all these subjects with limited human & financial resources. Lyxor can easily help them on all the spectrum or only some items depending on their needs.
Our objective, even if each institution is different, is to find a way to support them. That’s why we created the Lyxor Enhanced Architecture Program.
It’s not just about fund selection or portfolio management anymore, it’s definitely more a question of long-term support on various different subjects like active vs passive, transparency, ESG, alternatives.
Name: Marc Terras
Title: Chief investment officer, long-only asset allocation
Company: Rothschild Asset Management
Do you take into account French public SRI and TEEC labels in your selection?
We do not systematically take into account these labels as selection criteria. We have opted for a pragmatic approach depending of our clients’ constraints. However these labels can validate or not our comprehension, our analysis on the integration of ESG or TEEC features in an investment process.
In addition, we use other tools such as Morningstar and MSCI ESG enabling us to thoroughly analyse the ESG aspects of a portfolio : line by line, pillar by pillar, carbon footprint. We also have access to funds’ inventories in order to be sure of the orientation of investments towards the financing of the environmental and energy transition.
Name: Aurélia Caruso
Title: Head of Asset Allocation
Company: Scala Patrimoine
Is the environment in France favourable for innovation in asset management?
The arrival of Emmanuel Macron and the density of the start-up ecosystem will be favourable to innovation and especially to small caps, an asset class on which we remain overweight in our present allocations.
The current entrepreneurial base as well as the tax measures set by the government will incite French savers to invest more into French companies.
Regarding the current liquidity that is available on the French market, it seems sufficient to us even though it should reduce over the coming months in order to invest in French small caps.
Name: Pauline Tuccella
Title: Head of Multimanagement
Company: Haas Gestion
Do you select French boutiques?
In our fund selection process, we pay particular attention to the access to the fund management teams, something that French boutiques enable more easily.
In addition, they generally meet our total transparency requirements, provide complete and regular information at the level we expect from asset management firms. It is especially the case for French all-cap equity segment in which French managers’ funds stand out particularly well.
We select these funds for the quality of their stock-picking. As for this asset class, we consider proximity and access to the portfolio management team as an edge.
Name: Clément Inbona
Title: Senior portfolio manager - analyst
Company: Stamina AM
Do you take into account French public SRI and TEEC labels in your selection?
Environmental, Social and Governance (ESG) criteria are becoming more and more important for european asset managers and investors. Those factors highlight companies which have a long term strategy that could lead to a long term out-performance versus competitors. Hence, ESG criteria and financial performance can be compatible.
Nordic and anglo-saxon investment cultures are pioneers in developing ESG methodologies. France may be a bit behind but it is rapidly changing. Many French AM have moved towards ESG criteria recently.
At Stamina AM, we consider that ESG is not a fashion but a long term trend. That is why we are currently working at including ESG factors in our fund selection due diligence process.
Name: Camille Barbier
Title: Chairman, head of Fund Selection
Company: Salamandre AM
What is your view on French asset management boutiques?
The ecosystem of the asset management industry in France is extremely vigorous. To date, the number of french asset management companies is upper to 600. Most of these are independent management companies, so called « boutiques ».
I think that the emergence of these companies responds to investors needs for innovative and flexible investment products. The asset management companies which are subsidiaries of major banking groups moved gradually from flexible investment solutions to more passive portfolio management strategies.
Today, major market players in the asset management industry try to catch up by purchasing independent asset management companies. The challenge in these acquisitions will be to preserve the specific culture of the acquired boutiques, and better yet to introduce a new dynamic into old asset management companies.
Name: Thierry Guerillot
Title: Head of Fund Selection
Company: Myria AM
Does the structure of a France-domiciled fund matter to you as a fund selector?
Myria AM invests only in Ucits funds, whatever their domicile. Our short list is composed of 102 names including only 32 French-domiciled funds.
Features of the French Sicav such as the presence of independent board directors do not present any interest in particular for us. It rather remains an issue for institutional investors.
Name: David Tissandier
Title: Head of Selection & Balanced Portfolio Management
Company: La Française
Do you expect French asset managers to do more regarding green investments?
Investors are more and more conscious of the sustainability impacts of their investment decisions. This is true for both institutional and private investors. French asset managers are just starting to develop specific investment products in response to this new investor requirement.
And, the speed at which asset management firms are adapting their investment strategies is gaining pace. At La Française for example, we are diversifying our existing product range with green investment products across all product lines: equities and fixed income and have recently launched a carbon neutral investment strategy.
Concerning green fixed income, we are witnessing the application of a green strategy to namely credit and emerging supranational debt, where there is a growing volume of issuances.
Name: Damien Armand
Title: Fund Selector
Company: La Financière de l’Arc
What specific challenges do you face in fund selection being based in France?
With more than 600 French asset management companies approved by AMF, the offering might be big enough to satisfy our growing appetite.
Even with state-of-the-art worldwide databases in order to identify the top 10 of each category we want to invest according to a macroeconomic scenario, the specific challenges we face are choosing the right fund manager with, if necessary, a contrarian view to the consensus.
Risk return couple is not the quantitative ratio to follow but the Calmar ratio which is useful in order to compare a fund to its peers while taking the risk of a max drawdown during a stress test period into account.
Finally, even if we are not based in Paris but in Aix-en-Provence, this challenge can be faced by meeting the fund managers we are likely to trust in the long run.
Name: François Pascal
Title: Head of Balanced Funds of Funds
Company: Amilton AM
Does the structure of a France-domiciled fund matter to you as a fund selector?
As a French asset manager, the answer is yes and there are two main reasons for that.
The first one is linked to costs. For foreign-domiciled funds, fund managing costs are usually higher, as well as custodian transaction costs for French investors. The second reason turns out to be in case of fraud or negligence. For a France-domiciled fund, responsibilities are clearly indicated and unambiguous sanctions are imposed in the event of fraud.
Experience has sometimes shown in the past that the French law was more protective for shareholders than other European laws. In the Luxalpha fund affair in 2008, the Luxembourg law kept the custodian UBS quite safe. Since then European regulation has tended to be brought closer to French standards.
Moreover, in the specific case of French investors, it would be easier to deal with the French law.
Name: Roni Michaly
Title: Chief executive officer, head of Multimanagement
Company: Financière Galilée
Could Paris become EU’s main financial centre by 2025 as targeted by AFG?
Paris is a very resourceful city, it abounds with highly qualified students graduating from schools listed at the top of the worldwide rankings. As a visiting lecturer at ESCP Europe Business School, I can bear witness to this extraordinary strength. I can confidently name numerous investment strategies coming from French engineers or asset managers, known for being eminently innovative. Paris sends lots of its talent abroad, especially to London, representing what I consider a true brain drain. I therefore see Paris as well-placed to become the EU’s main financial centre by 2025, if Brexit occurs.
However, Paris still suffers from the bad reputation of France, a country with too much legal instability and complexity, coupled with unattractive fiscal and social regulations, a damaged image of inertia, and a follower in globalisation. If Paris manages to reverse only a few of these drawbacks, I am sure many asset managers would definitely choose Paris as their hub.
Name: Murielle Hermellin
Title: Portfolio manager, Head of SRI Fund Selection
Company: Promepar Asset Management
Do you take French public-backed SRI labels into account in your fund selection?
It is positive these labels exist. However, it is not because a fund is not labelled that I would not select it. I go beyond labels as an SRI fund selector since I am analysing the compliance of the funds with if possible the transparency code issued by the FIR (French responsible investment association), the ESG selectivity, financial and ESG funds reports, the dialogue with corporate, their voting policy and how their voting rights are exercised… To this extra-financial selectivity must obviously be added all criteria a classic fund selection process : financial performance, volatility, risk indicators, etc.
Highlighting French fund selectors’ role
Société Française des Sélectionneurs de Fonds' chairman Philippe Sarica on the challenges facing French fund selectors
Highlighting French fund selectors’ role
French fund selector association Société Française des Sélectionneurs de Fonds officially launched on 22 March 2018. Adrien Paredes-Vanheule caught up with its chairman Philippe Sarica
What has motivated the launch of the association?
The Société Française des Sélectionneurs de Fonds (SF2) was created on my initiative around a group of financial experts.
It gathers all professionals whose daily work is to assess the performance of fund managers within French financial institutions. The association aims at highlighting the fund selector role’s specificities, proposing best fund selection practices guidelines, delivering training modules and organising events on a regular basis.
It will be composed exclusively of professionals involved in fund selection, multi-management, research and financial teaching, whether they work for asset managers, entrepreneurial boutiques, banking and insurance group subsidiaries, advisory firms, financial research companies or universities and schools.
Its primary mission will consist of informing, supporting and contributing to the training of its members but also taking part to the financial education of a greater audience.
The SF2 carries the ambition of improving the professional knowledge of its members through discussions and experiences held during conferences. Its members will hence be able to integrate various workshops.
After the association’s last administration board meeting on 4 December 2017, SF2’s board is set as following: Philippe Sarica (La Finance Emotionnelle), chairman; Benoit de Brie (DNCA Invest), treasurer; Aurélia Caruso (Scala Patrimoine), general secretary; Jean-Christophe Cotta (Allocation & Sélection), vice-president; Sandrine Vincelot-Guiot (Vega IM), vice-president.
We are still in the early stages of the association’s setup. We expect to reach a hundred members by next December.
What is your view on the job of fund selector?
Fund selection impacts a huge number of activities. It refers to those working in asset management but we must include companies’ treasurers, financial executives working for insurance firms, provident and pension schemes. Individuals wanting to handle more fund selection for the management of their personal finance shall be considered as well.
What challenges do fund selectors face?
A challenge for fund selectors is to be recognised for the originality of their approach and their position within all financial institutions mentioned previously.
Technically, it means putting forward all aspects of the fund selector’s work but also better highlighting his/her role in the implementation of a tactical allocation of fund management styles within each asset class and better define his/her contribution to the value chain of an evolved open-architecture model.
Which challenges are specific to France?
Fund selection enables us to classify funds or portfolio managers within the European competitive asset management landscape, depending of their consistency and the regularity of their performance.
It also allows us to better identify management styles and performance factors portfolio managers are linked to.
In addition, it enables us to situate a selection of funds in comparison to those used or managed internally and to better handle factors of outperformance or underperformance within a company’s own portfolio management for
firms running an internal fund management business.
The main challenge is first to review past experiences and determine the good and bad practices seen in France.
A second remains to present the evolutions - going beyond quantitative and qualitative techniques – as well as the new ways of fund and portfolio manager’s assessment and follow-up.
A further third challenge would be to upgrade regulation as it has much reduced and constrained the activity of fund selection.
What advice would you give to foreign
asset managers targeting French fund selectors?
Being well aware of the great diversity of French fund selectors and of the current regulation in place prior to any move.
All depends of the fund selectors’ positions and roles they hold within the institution they represent and of the objectives that have been set by their organisations: insurance firms, provident institutions, asset managers, intermediary platforms, companies.
Selectors at the Ritz
The first InvestmentEurope Frabelux Forum
Fund selectors from France, Belgium and Luxembourg heard from six asset management companies at the first InvestmentEurope Frabelux Forum at the Hotel Ritz, Paris on 22 March 2018. Adrien Paredes-Vanheule reports
In history books, French king Louis XV remains associated with the rise of luxury and the arts in France at their finest. And so it is in a room named after the monarch, Salon Louis XV, at the renowned palace Hotel Ritz Paris that 25 fund buyers from France, Belgium and Luxembourg attended the first ever InvestmentEurope Frabelux Forum.
Six asset management companies presented on various topics : Candriam; First Trust Global Portfolios; Finisterre Capital, a Principal Global Investors boutique; T. Rowe Price; Pyrford International , a subsidiary of BMO GAM; and TwentyFour Asset Management, owned by Vontobel.
EM DEBT VIEWS
Candriam’s senior client portfolio manager Charudatta Shende kicked off the event, presenting on the company’s emerging market hard currency debt outlook.
Shende highlighted the robust position of emerging markets, arguing they have become less vulnerable to external economies and that reforms and orthodox policies are being applied. In addition, they are being supported by a rebound in commodities and domestic demand.
A common headwind for emerging markets remains US president Donald Trump’s politics.
The Trump effect will not be uniformed within the emerging markets landscape as not all countries have similar exposure to US trade, noted Shende.
Fundamentals are strong and EM’s growth remains on the rise, he said, adding the firm expected returns of 4% in EMD hard currency and of 7% in EMD local currency space over a one-year horizon.
HIGHLIGHTS OF THE FRABELUX FORUM 2018
Asked about the most important SRI factor by the audience, Shende picked social and pointed out China and Russia’s scores on this component were nil.
As of end February 2018, the Candriam Bonds EM fund kept a positive stance on high yielder energy exporters such as Angola and Iraq as well as on high yielders with supportive structural reform momentum (Argentina, Ukraine, Egypt).
Quasi sovereigns with attractive relative value were preferred to sovereigns. The fund was underweight in countries sensitive to US treasuries changes.
Another EM debt picture was brought to investors by Damien Buchet, CIO total return strategy at Finisterre Capital, who presented on the Finisterre EMD total return fund, whose Buchet suggested it presents a convertible bond risk profile with priority given to limit capital loss and volatility.
EM fixed income formed 17% of the $96trn global financial securities universe as of March 2017, he recalled, making the asset class too large to be ignored by investors.
Speaking about the positioning of an EM total return portfolio across the market cycle, Buchet said markets may be in the middle of a correction that started earlier this year. Inflation is catching up in many places especially in Asia and markets have not caught up enough with monetary policy normalisation.
This normalisation could propel volatility and credit spreads rise as well as higher default rates in EMD world, explained Buchet.
“We are hostage of the global outlook, EM credit cannot escape some widening if US rates grow. It does not mean that we will not see a repricing on the short term,” he assessed.
According to Buchet, EM growth remains strong and synchronises with DMs, but EM are losing momentum and still too dependent on global trade over domestic sources, with investment lagging.
US trade war potential still forms the main risk focus while he observed EM political risks lingering in Mexico, Brazil, Colombia, Turkey with improvements seen in South Africa and Russia though.
Playing currencies through a smart beta ETF was the topic of First Trust Global Portfolios’ chief executive officer, who presented the asset class as the largest in the world with a daily turnover of €5trn in 2016.
The First Trust Factor FX strategy applies a currency carry approach, that consists of borrowing in low yielding currencies against lending in high yielding currencies, this has historically generated excess returns said Fulton. Value and momentum are used to extract carry.
It aims to benefit from a global currency divergence led by a megatrend that sees globalisation, innovation and technology reducing market segmentation to the law of one price – “a good must sell for the same price in all locations”.
In practice, First Trust’s smart beta strategy is long undervalued and higher yielding currencies with positive momentum while shorting overvalued and low yielding currencies with negative momentum.
Developed and emerging markets currencies are separated in the FT Factor FX strategy’s process.
The smart beta strategy was long Singaporian dollar and Turkish lira at the time of Fulton’s presentation.
JAPAN’S CORPORATE IMPROVEMENT
Japanese equities have been more volatile but a better yielding asset class to invest in than their counterparts over the last decade. This was the initial postulate of Laurence Taylor, a portfolio specialist in the equity division at T. Rowe Price.
Tremendous positive changes are happening in Japan’s corporate sector assessed Taylor. In reaction to low profitability and shareholders returns issues, Japanese firms change their behaviour, highlighting the implementation of the Corporate Governance Code and StewardShip Code.
In 2017, 90% of non-independent directors were appointed in Japan corporate boards whereas in 2004, almost three quarters of directors were not independent, Taylor pinpointed. Surveyed on the Japanese central bank purchasing stocks, he reckoned BoJ’s behaviour was symptomatic of its will to make things change in corporate governance locally. Corporate governance question starts to be raised more and more, Taylor said.
Profitability has improved as well in Japan. Free cash is now more used either for dividends payments or share buybacks purposes and less retained in Japanese corporates balance sheets than a few years ago, he noted.
For T. Rowe Price’s portfolio specialist, Japan is closing the cash flow gap and local companies are really giving back to shareholders for the first time in history.
Robotics’ rise form a main play of the T.Rowe Price Japanese equity fund holding 80 positions, IT and related services was the first sector invested by the fund at the end of December 2017.
EQUITIES AND GOVIES TO PRESERVE CAPITAL
The Pyrford Global Total Return (Sterling) fund has had zero weight in Japan throughout the 1990s and similar exposure to US and European banks since 7 years.
An argument for Pyrford International’s senior product specialist Lars Nielsen to explain the fund is neither peer group influenced nor index oriented in its equity selection.
Nielsen outlined the investment process of the Pyrford Global Total Return (Sterling) fund, that puts capital preservation through low volatility and significant downside protection at its core.
It invests in value and quality equities, high-quality sovereign bonds and holds a bit of cash while exposure to alternatives is found via listed equities.
The reason why Pyrford uses equities and sovereign bonds is the strong correlation of other bonds segments such as high yield credit with equities, said Nielsen. Liquidity constitutes another important criteria for the strategy and high yield bonds cannot be sold anytime, Nielsen argued.
Issuers eligible to the fund on both asset classes are analysed through a five-year return frame.
Four returns drivers have been underlined by Pyrford’s Nielsen : asset allocation, duration management, active equity selection, currency.
Pyrford’s general outlook is that both equity and bond markets are expensive. “Low single-digit returns are probably the best that can be expected on a medium-term outlook.”
“Overall debt levels (relative to GDP) have increased in the developed and emerging economies since the financial crisis. We believe this to be the most significant threat to “healthy” economic growth going forward. The debt ratios need to be modified without triggering another financial crisis.”
LANDING FOR US
Is it time to leave fixed income? No, replied Gary Kirk, founding partner and portfolio manager at TwentyFour Asset Management, as fixed income markets are broad and have always been the best source of income.
Kirk emphasised on the importance to know where investors are in the economic cycle and a way to know it is to pay attention to clues embedded in central banks’ quarterly reports.
End of cycles have a huge impact on junk bonds (CCC rated) said Kirk, recommending to stay clear of the segment as the current expansion cycle is ending in the US.
Though he highlighted not every cycle ends with a hard landing. A total of 14 US recessions have been recorded since 1920 with only five hard landings tallied, suggested Twenty Four Asset Management’s portfolio manager. He added there was no hard landing occurring if the cycle was to end today because rates remain ultra-accommodative, the banking system is well capitalise and coordinated global recovery means the system can better withstand any idiosyncratic shocks.
Kirk said credit spreads will remain unchanged this year and rates markets stay at risk of producing negative returns.
TwentyFour Asset Management is hence to avoid a number of segments this year including European govies, long dated IG corporates, CCC rated bonds, gilts and gilts-correlated bonds.
In contrast, Kirk highlighted three sectors standing out as having most relative value and likely to contract in 2018: European CLOs, subordinated debt, emerging market debt hard currency.
Kirk said that if his portfolio was a bond, it would be a high quality and well researched credit bond to avoid default risk, short dated to avoid rising rates and mark to market risk, in hard currency and yielding around 4% with three or four years to maturity.
InvestmentEurope is hosting further Summit events through 2018 for fund selectors across the region. Click on the event logos to access further information and register your interest in attending these key events.
IN THEIR OWN WORDS
Speakers & tweets from the Frabelux Forum 2018
CHARUDATTA SHENDE, CANDRIAM
Charudatta Shende is senior client portfolio manager within the fixed income team at Candriam since September 2016.
He is responsible for the communication and messaging regarding all fixed income strategies, with a strong emphasis on EM debt and credit.
Before, he was product specialist at Carmignac, where he was in charge of communication on the fixed income funds, and product research analyst at Pioneer Investments in Dublin.
#IEPARIS Fundamentals are stong, EM growth is on the rise. Current accounts are improving. FX reserves, short term debt positive, @candriam Shende
#IEPARIS EM debt SRI fund includes countries that have best practices. Human capital, natural capital, social capital, economic sustainability. four criteria considered for SRI analysis, @Candriam Shende says
LAURENCE TAYLOR, T. ROWE PRICE
Laurence Taylor is a portfolio specialist in the equity division at T. Rowe Price.
Prior to joining the firm in 2008, Taylor was a portfolio manager at AXA Rosenberg, with responsibility for European institutional clients, and began his career at Hewitt Associates in the UK Investment Practice. There he provided investment advice to European institutions before specialising in the research and selection of global and international equity managers in the manager research team.
#IEPARIS Japan has been more volatile but better than Europe. Tremendous positive changes in corporate sector happening in Japan – Laurence Taylor, T. Rowe Price
#IEPARIS Profits delivery has been better than in any other class over the last decade, argues Laurence Taylor about Japanese equities
DEREK FULTON FIRST TRUST GLOBAL PORTFOLIOS
Derek Fulton is director and CEO of First Trust Global Portfolios he joined in 2011.
He is responsible for development and distribution of actively managed and smart beta strategies. Formerly, he established a fixed income boutique in Paris managing global bond funds.
Prior to that, he spent 12 years at Aberdeen AM where he held roles such as head of Asian fixed income in Singapore and head of global fixed income strategies in London.
#IELPARIS Currency's world most liquid asset class: $5trn total daily turnover, says @ftportfolios CEO Derek Fulton
#IEPARIS Currency carry trade. Borrowing in low yielding against lending in high yielding currencies has historically generated excess returns says Fulton. Value and momentum used to extract carry – Derek Fulton, First Trust Global Portfolios
DAMIAN BUCHET, FINISTERRE CAPITAL
Damien Buchet is CIO of the total return strategy at Finisterre Capital. Before joining the firm in 2015, he was AXA IM’s global head of EM Fixed Income. Previous roles include head of Sovereign & EM credit trading and structuring at Dexia Credit Local in Paris and head of EM at CCR Gestion. He also served as senior fund manager, deputy head of alternative EM funds at Barep Asset Management in Paris. He started his career in Hong Kong as an Asian equity fund manager at Euro Pacific Advisers and a financial analyst, China desk at Societe Generale Hong Kong branch.
#IEPARIS We probably started a market correction early this year. May be in the middle of it says Buchet. Inflation is catching up in many places especially in Asia. Markets have not caught up enough with monetary policy normalisation – Damien Buchet, Finisterre Capital
#IEPARIS Be cautious of how you use local currency debt as sharpe ratio could be destroyed – Damien Buchet, Finisterre Capital
LARS NIELSEN, PYRFORD INTERNATIONAL
Lars Nielsen is senior product specialist at Pyrford International, a division of BMO Global Asset Management. He has overall responsibility for all client oriented activities at Pyrford. Prior to that, Nielsen worked in similar roles at Dalton Strategic Partnership, TT International and Alliance Capital. He started his career at investment analytics company Barra. He spent nine years there and his last position was as a director for the US equity money manager business. Before going to the US, he held positions in the European part of the business.
#IEPARIS We believe you have to wait for an awful long time now to make returns in the US equity segment now – Lars Nielsen, Pyrford International
#IEPARIS No US and European banks in the fund for 7y, Banks need to think about their business model and how to generate sustainable ROI – Lars Nielsen, Pyrford International
GARY KIRK, TWENTYFOUR ASSET MANAGEMENT
Gary Kirk is a founding partner, investment committee member and portfolio manager of TwentyFour Asset Management.
He manages the firm’s multi-sector bond team with funds including the dynamic bond fund and strategic income fund. Kirk’s former asset management roles were with Daiwa Capital, Royal Bank of Canada, CDC and Wachovia Bank.
#IEPARIS Is it time to leave fixed income? No. Good thing fixed income markets are broad – Gary Kirk, TwentyFour Asset Management
#IEPARIS Not every cycle ends with an hard landing. 14 US recessions since 1920 only 5 hard landings – Gary Kirk, TwentyFour Asset Management
Preventing Brexit disruption
Paris seeks a neighbourly transition
Preventing Brexit disruption
While Paris is making strenuous efforts to grab its Brexit share, the business community is at pains to offer reassurances it has no intention of disrupting UK financial services. Adrien Paredes-Vanheule reports
The schedule is in place. The exit of the United Kingdom from the European Union, more commonly known as Brexit, will happen on 29 March 2019, with a transition period due to last to 31 December 2020.
It is no secret that Paris, just like Dublin, Frankfurt Luxembourg and other cities, covets London’s financial services business in light of post-Brexit rules that will apply for British companies, especially regarding fund passporting in Europe and investment management delegation for asset managers.
Last November, the French capital reinforced its status as a growing European financial hub when it was chosen as the new location of the currently London-based European Banking Authority. The EBA will be relocated in Paris by 29 March 2019, making France home to the two major European financial institutions as the European Securities and Markets Authority (Esma) has been established there since 2011.
THE PUSH FOR BUSINESS
Since the Brexit vote, French delegations gathering various players on the Paris financial scene have conducted roadshows in London on a regular basis to extol the merits of the country to financial firms headquartered in the City. Asset managers whose management or employees are of largely French nationality are most often the target, but not exclusively so.
In March, French financial markets regulator AMF contacted British investment firms doing business in France and French asset managers with UK clients seeking information about their plans in light of Brexit. Reuters reported some lawyers and fund managers considered the letter to be premature.
Speaking in the March 2018 edition of InvestmentEurope, Natasha Cazenave, managing director and head of the Policy and International Affairs Directorate at AMF, said the institution’s efforts have been focused on mapping all issues that could eventually result from Brexit.
“Our role is to be able to answer questions raised by various financial players. We continue to see a number of demands from asset managers willing to strengthen their existing teams in France.
“Persistent uncertainty around the possible outcome of the Brexit negotiations means firms need to step up their contingency plans.”
RE-BALANCING, NOT REPLACING
France, unlike its competitors seeking to attract London-based financial services, has generated suspicion in the UK and French-bashing articles have appeared with some frequency in the British press since the Brexit vote.
A strong belief prevails that France will cut all investment management delegation once Brexit will be on. AMF’s representatives deny any such claim, insisting that it is only supportive of Esma’s views on investment management delegation after Brexit.
Cazenave said: “AMF supports Esma’s opinions on delegation of investment management. They are consistent with existing EU legislation and simply seek to avoid the constitution of letter boxes. EU entities which decide to delegate portfolio management need to have sufficient resources to oversee the delegated activities. That being said, we fully recognise the benefits of delegation arrangements and are not advocating for an overhaul of existing practices.”
She also added: “We do not have the intention of replacing London by any means. We do not expect a massive exodus of financial activities from London. London will remain a major financial centre.
“AMF supports Esma’s opinions on delegation of investment management. They are consistent with existing EU legislation and simply seek to avoid the constitution of letter boxes”
Natasha Cazenave, managing director and head of the Policy and International Affairs Directorate at AMF
“What we anticipate is a certain degree of rebalancing between London and various EU financial centres as market participants make arrangements to ensure continuity of service for their clients. In our post-Brexit view, it is more likely that we will end up in a multipolar world with a number of financial centres.
“Relocations of activities will occur in function of each player’s specificities. If an asset manager holds a license in Germany, it would logically strengthen its German team.”
Bertrand Gibeau, partner and head of Business Development at Reinhold & Partners, stresses that an increasing number of portfolio management teams are leaving London to establish a start-up in the French capital because the environment in France is favourable to this type of companies.
“Business setup costs are cheaper in Paris than in other cities such as Dublin or Luxembourg. In addition, the investor pool is larger. Though Luxembourg and Ireland still lead the way in terms of fund structures. But the French Sicav needs time to be considered as an alternative,” he adds.
However Gibeau points out one of France’s issues with the Brexit is that it may be focusing too much on harvesting London-based asset managers and that in the context of an internationalisation strategy of Paris’ financial place, roadshows should be conducted to pitch the French solution towards New York or Singapore-based asset managers, who have to organise a European solution outside London.
“I suspect the consequences of Brexit impact all those who would have selected London ‘naturally’ and have an impact on a number of countries. All French entities should push together to promote France,” says Gibeau.
FLIRTING WITH ILLEGALITY
Gibeau observes that a number of fantasies ended with the announcement of the transition period for Brexit, adding that the question for British managers or non-European ones having set up their office in the UK, is now how to sell products in Europe.
One of Gibeau’s concerns is the emergence of sales techniques that seem to be in danger of flirting with illegality.
“Some companies have established chaperoning techniques. You choose or create a ManCo in a European jurisdiction.
“Prospects are contacted from this ManCo and the behalf of British managers and when the face-to-face meeting comes with the investors, the ManCo’s representative who has set the meeting comes alongside the fund manager.
“ManCos could potentially become call centres full of product specialists but Esma is likely to redefine the framework of fund marketing in the near term.”
Gibeau adds: “Though chaperoning approaches are unlikely to work given their high level of dangerousness.
“Chaperoning could lead to the transfer of client database to a third-party – the ManCo in this case – and what is the most valuable asset for an
asset management company if not its client database?
“Asset managers would be tempted to recruit ManCos’ workers who would eventually leave with client databases from managers’ competitors,” Gibeau explains.
OPPORTUNITIES FOR THIRD-PARTY FUND MARKETERS
Brexit also brings opportunities for French third-party fund marketers, suggests Eric Bonneville, chairman of the French TPM association.
“Brexit will clearly bring opportunities for French TPMs. Even though rules are not precisely established, a number of asset management companies start to take some steps in order to face Brexit effects. Such opening-up for TPMs is an opportunity for them to resize their perimeter.
“For instance, one TPM company is currently assessing its partial transformation into an asset management company for one of its foreign clients. Also other TPMs look at acquiring new contracts,” Bonneville says.
French third party marketers: a growing market
Eric Bonneville, president of the French third party fund marketing association AFTPM, highlights the current trends in the field
French third party marketers: a growing market
Eric Bonneville, president of the French third party fund
marketing association AFTPM, highlights the current trends
in the field to Adrien Paredes-Vanheule
What trends do you stress in France as for the distribution of funds through third-party fund marketing companies?
The profession of third party marketer is developing. TPMs appeared ten years ago in France and the association gathers 20 TPM companies currently. For us, this is a sign of a growing market.
Our members currently represent around 80 asset management companies, of which more than half are foreign managers from over 15 different countries for assets under management of over €12bn.
Choosing a TPM for asset managers enables gain in flexibility and efficiency, particularly given that they face pressure on margins, by using a service whose remuneration comes primarily from successes, therefore from assets raised.
Do you see ever more foreign asset managers targeting France?
The appeal of the French market is strengthening towards foreign asset managers, it is an important market in continental Europe but complicated regarding commercial practices.
Being anchored locally through the services of a TPM can bolster the efficiency of foreign managers’ commercial representation. It is even more true for a few Asian asset managers, including Chinese ones, wanting to develop themselves in France and continental Europe.
Are funds marketed by foreign managers through TPMs in France mainly concentrated on an asset class or is that diversified?
A trend since a few years has been indeed the marketing of a vast majority of long only stock picking equity funds.
Diversification remains limited to flexible or absolute return products. Foreign alternative asset managers are little represented currently.
Whether in the active, flexible or alternative management field, TPMs are well positioned to drive the commercial relationship with professional investors and follow up on it. They provide information, reporting and data related to funds marketed or subscribed.
Do TPMs have demands from French asset managers, especially boutiques, to develop outside France?
TPMs are operating ever more in a European framework or even a larger one. Some provide the option of a commercial representation in Benelux countries, Germany, Switzerland, Austria, Italy, Spain and even Canada.
Delegating commercial activities to a TPM makes sense for French asset managers wishing to expand their commercial development outside France once they have acquired a necessary legitimacy locally.
What is your advice to foreign managers wanting to enter the French market?
The asset manager shall first question itself on the area or the areas where it wants to develop itself through TPMs or if it only targets France. Then selecting a TPM enables the asset manager to gain in flexibility and reactivity.
TPMs can come into operation, without delay, with professional teams for the presentation or the strengthening of their brand or of their products towards qualified investors.
Though TPMs must ensure that the foreign asset manager operates in a complementary area to its other asset management clients. In the end, the TPM takes part to the investment process distribution chain and can also support the emergence of new asset management