- 1. Know your clients, know your market : a perspective on
FranceAIMSE Annual Conference February the 2nd, 2006
2. Table of Contents
- 1. The French Asset Management industry
- 2. The Institutional market
- 3. Market players and winning strategies
3. 1. The French Asset Management industry 4. The 4th largest
asset management industry in the world Source: AMF/AFG A growing
market highly invested inmutual funds Source: EFAMA Market shares
of the European fund industry 2004 2001 1997 813 1412 1830 French
UCITS Mandates 1000 2000 12% CAGR In Billion Euros 1080 750 Luxemb.
21% UnitedKingdom 9% Others 13% Italy 7% Ireland 8% France 22%
Germany 16% Spain 4% A strong appetite for money market UCITS
- Money market funds historically dominate as interest-bearing
current accounts only appeared in 2005.
Source:EuroPerformance Guaranteed 9% Balanced 10% Equities 24%
Money market 47% Bonds 10% 5. Mutual funds distribution in Europe
is dominated by banks. No major change expected in channel market
share Source: Cerrulli Associates
France Source:Cerulli Associates, BNP PAM.Figures estimated as
of 2005.However, open architecture expected to increase
dramatically Assets Under Management in Europe(mutual funds only)
Source: FEFSI 3 700 Bn 2004 2014E Third Party Funds In-house Funds
6 000 Bn 92% 8% 70% 30%
- Push strategy shifts to pull strategy
- Selection and advice become the new paradigm
6. 2. The Institutional market 7. The institutional market is
dominated by insurance companies. Assets by institution type (2004
estimates) Source: BIPE/Af2i
- Insurance companies hold 1130 Bn of a total 1386 Bn held by
institutional investors
8. Institutional investors importance in the economy is growing.
Assets of the institutional investors in % of GDP Source:
Af2i,Ministryof Finance 2004 2000 1995 55% Non-life insurance Life
insurance 50% 100% % of GDP 35%
- Life insurance companies account for almost the whole
trend.
Mutual benefits& social protection Employees savings Others
89% 91% 61% 61% Share of the institutional investors in the
households financial wealth Source: BIPE,Ministryof Finance 2004
2000 1995 25% Life insurance (unit-linked contracts) Life insurance
(guaranteed contracts) 25% 50% % H. financial assets 19%
- Unit-linked insurance contracts are developing, but major flows
go to guaranteed insurance contracts .
Retirement plans Employees savings Others 34% 38% 21% 26% 9. How
are they invested ? } Asset allocation and UCITS Source: Bank of
France (securities survey of insurance companies and retirement
institutions)
- One third of the mutual funds in asset allocation (global
balanced)
Money market 6% Others 6% Balanced 10% Equities 4% Bonds 3%
Asset management delegation Source: Image et Finance (panel on
competitive market, excluding. delegation within the same Group)
AuM (Bn ) Insurance companies Social protection inst. Banks
Miscellaneous Total Total 217 92 20 12 341 Delegation 19(9%)
53(58%) 4(20%) 7(58%) 81(24%)
- Total delegated assets are estimated at 130 Bn in different
forms :
-
- Dedicated f. of funds 14% 7%
-
- Open mutual funds 31% 26%
2004 2003 10. Market trends in 2005 35% of institutional assets
are managed externally in Continental Europe
- France, Germany, Nordics and the Netherlands are the major
markets for externally managed assets in Continental Europe.
Continental Europe 29% Via pooled or commingled funds Via
dedicated institutional asset management 6% France 37% 9% Germany
33% 2% Source: Greenwich Associates Use of Investment Consultants
Source: Greenwich Associates Continental Europe 32% 2004 2005 41%
France 26% 19% Germany 29% 28% Increasing use of RFPs in France
Source: Image et Finance % of the panel Insurance companies Social
protection inst. Banks Miscellaneous Average 2004 38% 84% 13% 39%
46% 2003 43% 11. 3. Market players and winning strategies 12.
Looking to the future : opportunities in France
- Upcoming development of corporate pension plans (PERCO)
- Increasing demand for sophisticated products : absolute return
strategies, portable alpha, credit derivatives, hedge funds
- Cash rich institutions will continue to demand money market
funds, including innovative dynamic funds
- Development of open architecture by domestic players
13. The asset management industry recognizes four macro-clusters
of players. Assets under Management Client and product coverage
Mapping of Asset Management players Hedge funds Opportunistic
players Equities,ccy overlay Niche players Euro banks Challengers
Local banks & Insurance Comp. Market leaders
-
- Challengers face the issue of profitability and critical size
issues
-
- Niche players leverage on one or two core competencies to
defend their franchise
-
- Opportunistic players step into the market on high margin
products
14. The French asset management market is still mainly
local.
-
- AXA Investment Management
-
- Crdit Agricole Asset Management
-
- BNP Paribas Asset Management
-
- Fortis Investment Management
-
- Groupama Asset Management
-
- Edmond de Rothschild Asset Management
Source: IPE
- Most established asset managers in France :
- International global players are entering the market, but their
market share is still quite low :
-
- Europe (excl. France) 19%
-
- International (excl. EU) 1%
Source: AMF 15. Key success factors
- Demonstrate long-term commitment to the market (human
resources, brand, long-term credibility)
- Maintain leading edge technology, structuring capabilities and
clients service : create differentiation through permanent product
innovation
- Develop your ability to understand your clients needs and be a
solution-provider (IFRS, ALM, Liability Driven Investments,
absolute return strategies)
- Create a superior risk management discipline and apply a clear
and consistent investment philosophy
- Performance is not the main criteria for hiring an asset
manager, but it is the most frequently cited criteria for
terminating managers
Products are not bought anymore, they are sold
