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BNPPAM_AIMSE.ppt BNPPAM_AIMSE.ppt Presentation Transcript

  • Know your clients, know your market : a perspective on France AIMSE Annual Conference February the 2nd, 2006
  • Table of Contents
    • 1. The French Asset Management industry
    • 2. The Institutional market
    • 3. Market players and winning strategies
  • 1. The French Asset Management industry
  • The 4th largest asset management industry in the world Source: AMF/AFG A growing market… … highly invested in mutual 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% United Kingdom 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%
  • Mutual funds distribution in Europe is dominated by banks. No major change expected in channel market share Source: Cerrulli Associates
      • Banks 76%
      • Insurance 19%
      • IFAs 3%
      • Direct 2%
    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
  • 2. The Institutional market
  • The institutional market is dominated by insurance companies. Assets by institution type (2004 estimates) Source: BIPE/Af2i
      • Life insurance = € 992 Bn
      • Non life = € 138 Bn
    • Insurance companies hold € 1130 Bn of a total € 1386 Bn held by institutional investors
  • Institutional investors’ importance in the economy is growing. Assets of the institutional investors in % of GDP Source: Af2i, Ministry of 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, Ministry of 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%
  • 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 :
      • Mandates 8% 8%
      • Dedicated funds 47% 59%
      • Dedicated f. of funds 14% 7%
      • Open mutual funds 31% 26%
    2004 2003
  • 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%
  • 3. Market players and winning strategies
  • 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…
  • 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
  • The French asset management market is still mainly local.
      • IXIS Asset Management
      • AXA Investment Management
      • Crédit Agricole Asset Management
      • SG Asset Management
      • BNP Paribas Asset Management
      • Fortis Investment Management
      • Dexia Asset Management
      • Natexis Asset Management
      • Groupama Asset Management
      • Sogeposte
      • MMA Finance
      • Sinopia 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 :
      • French companies 80%
      • Europe (excl. France) 19%
      • International (excl. EU) 1%
    Source: AMF
  • 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