Life less a year

French market authority AMF approved 631 asset management companies as of end July 2016. InvestmentEurope catches up with two boutiques that have launched their first funds this year.

Futur Asset Management and AUM Invest are among the latest firms to have joined AMF’s approved list, having received a green light from the local market regulator in October last year and March 2016 respectively.

Since inception, Futur AM, focusing on behavioural finance, has attracted inflows of some €10m from professional investors and €5m from retail investors. Its first Ucits strategy for retail clients, Futur Flexible PEA, was launched in March 2016.

“Futur AM’s core philosophy relies on behavioural finance, which is a recent area in academic research. The offer is not much developed in France yet even though some tools are already implemented in a few managers’ strategies,” say Julien Nebenzahl (pictured) and Nicolas Charvet, respectively CEO and head of Asset Management at Futur AM.

The manager studies the movement of crowds and how these impact markets, in order to anticipate future market movements. It works with independent global macroeconomic researchers to achieve this.

Fund performance relies on two main drivers: global exposure to markets and the arbitrage of stocks. Exposure to European equities ranges from -20% to 120%. The CAC 40 index is partially replicated but some 30%-35% of its stocks are arbitraged.

“We thought 2016 was the right time to launch the fund as it is a chaotic year,” Charvet argues.

But how will they stand out in a competitive environment?

“Performance remains the main goal of all managers, but over the short term our behavioural finance expertise arouses interest from investors as it remains a very different approach to risk on financial markets,” Nebenzahl answers.

However, he also stresses the growing academic research linking traditional finance to behavioural finance.

“The first results are exciting and some institutional clients are considering diversifying their allocation to behavioural finance managers. But it will take time.”

Following AMF’s authorisation in March 2016, AUM Invest launched two Ucits equity funds by June this year: AUM Europe Equity and AUM Emerging Equity.

“In these two regions, the bucket of stocks remains more interesting as companies are not only local but global. If you look at the Stoxx600 index, it is now more globalised than the S&P 500,” says Emmanuel Morano, chairman and head of Asset Management at AUM Invest.

Backed by Swiss multi-family office 1788 Capital, some €15m of inflows have come in its first two months, with AUM targeting French institutional and large private investors and family offices.

Other risk budget solutions such as long/short equity are set to be launched. But the manager is currently focused on letting investors know about AUM Invest’s philosophy and methodology.

This includes applying a conviction based management while taking into account the risk dimension of its investments.

“We do capitalise on qualitative companies that perform well. Following the ‘value’ marketing momentum is not our objective, as being value only consists of buying cheap stocks,” Morano says.

“We do rate companies through our own scoring methodology that gathers a competitive, quantitative and fund manager scoring.”

The AUM Europe Equity fund portfolio concentrates to 25-40 qualitative stocks picked from the Stoxx TMI 1000+, while these of AUM Emerging Equity are selected from the Stoxx 1500 EM universe.

“Emerging markets remain somehow taboo in France as most asset managers believe it needs presence on the ground to handle an EM equity fund. Also the country risk is often highlighted. But in most emerging markets countries, listed companies do have to produce reports that are similar to these of European or global companies.

“If I pick America Mobiles, a key Mexican telecom player, in my fund, what should I consider first? The stock or the country? The stock comes first. Moreover, in any sector, you can find challengers to companies headquartered in the developed markets,” Morano argues.

Questioned about burdens on new managers launching in France, Morano observes the French asset management industry is highly professionalised, even when it comes to boutiques.

“Also the regulation has been getting ever tougher since 2009. Drawing inflows remains hard for boutiques that have just launched as we face some constraints in France. For instance, we cannot report funds’ performances during their first year,” he says.

But for Morano, difficulties can also be viewed as opportunities for boutiques.

“When the market is under pressure in terms of pricing, best practices, transparency and performances are rewarded. The competitive aspect of the market brings a leadership effect over winners. Hence some French boutiques have seen their AUM flourished in recent years,” he says.

This article is a longer version of the feature that appears into the October issue of InvestmentEurope.

Adrien Paredes-Vanheule
Adrien Paredes-Vanheule is French-Speaking Europe Correspondent for InvestmentEurope, covering France, Belgium, Geneva and Monaco. Prior to joining InvestmentEurope, he spent almost five years writing for various publications in Monaco, primarily as a criminal and financial court reporter. Before that, he worked for newspapers and radio stations in France, in particular in Lyon.

Read more from Adrien Paredes-Vanheule

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