Creating blockbusters remains a key growth factor at Carmignac
The business efficiencies gained in pursuing a limited range of very large funds is a key factor behind the ongoing development of Carmignac Gestion, explains managing director Eric Helderlé.
The French originated firm increasingly sees itself as “European” as business continues to develop across borders, and the number of staff hired to address different European markets climbs. Recently Carmignac announced hires to support its Swiss and Italian teams, as well as trading staff – over 80 staff have joined in the past three years.
In light of the growth in both staff and assets, Helderlé, who is based in Paris, recently shared his views on relevant issues, including product development, and the possible challenges to distribution across Europe from regulatory developments.
IE: Is it a challenge being based in France today?
EH: Carmignac is not a French company anymore. You might look at it as a French company, but 80% of our assets are outside of France. We are already a European company, not a French one.
The changing French climate doesn’t really affect us. We decided around 2000 to become European through our Luxembourg subsidiary. Our investment range is already international.
IE: Then, as a ‘European’ company, do you have a view on European level regulatory changes?
EH: What always worries us in these difficult times is the temptation to revert to national models.
There is temptation in the discussion around MiFID to leave more space around this for national countries to do what they want. This is a source of worry for cross-border fund managers like us, because the leverage we have through Ucits, with a single product that can be sold across borders around Europe, is huge for a company such as ours with 200 people.
We can manage over €50bn in assets. It is due to the simplicity of the model: selling one single fund and leveraging on product. Patrimoine is €28bn as you know. You can really create blockbusters and compete with the US.
We know that the strength of the industry in the US is the size of the product. And leveraging the size of the product is the key for an industry that is efficient – can cut costs and be more efficient – and better serve the investor.
If we go back to a more protectionist type of behaviour by leaving individual countries to set their own rules, because there is a lack of consensus in global decision-making, that is going backwards.
That is not a good sign, first of all for the construction of Europe. That is because Europe is also about building common standards; for your electric plug, for your investment, for all sorts of things. If you go back and say ‘OK, you can bring back your old electric plug’ that is not a sign of progress. That is the main concern.
Another issue is about MiFID II and the RDR. We fought very hard against the implementation of a similar type of regulation in Continental Europe, but it is still under discussion. We are clearly not in favour of the RDR principle. We have to live with it in the UK – and it is interesting for us because we are addressing the UK market. However, there is the whole issue of mid-sized investors who will be left alone without any advice, any follow-up, because right now they cannot afford the advisory fees.
Previously, there was a redistributing effect in the commission system, which I think is not only taken into account when you have big clients. Of course you get bigger commission, but by getting more commission on higher level investors you can serve lower level investors. This redistributing model or commission model is very socialist, by the way, and the French could take into account it is a redistributing system.