Down but not out: Greece’s fund management industry
Greece’s fund managers are determined to weather the economic storm that is pushing Greece close to collapse
The Greek asset management industry has undergone a sharp contraction since the onset of the financial crisis in 2008, with other factors exacerbating the impact of the crisis for fund managers.
According to the Hellenic Fund and Asset Management Association, assets under management have been slashed to a fifth of their value in 2006 and were down from about €30bn then to less than €6bn on 23 September this year.
Aris Xenofos, president of the association, puts a brave face on the run of pressures and bad news about the Greek economy and their impact on the domestic industry. He says several factors contributed to the decline.
Among them was the strong devaluation of assets caused by the initial financial crisis.
Then came the sovereign debt crisis, which hit domestic-based assets hard.
Clients also became more risk-averse and cautious as they sought to cut or recoup losses.
Finally, investors faced draconian fiscal policies imposed by the government in exchange for international financial support to overcome the crisis.
In the past nine months alone, assets under management fell by more than €2bn, with net outflows of €750.7m.
All asset classes also fell this year, with equity funds hardest hit and down nearly €700m since January.
Xenofos says bearing in mind the context of the global crisis and local constraints, Greece’s fund management industry has coped as well as it could.
“If you judge how the fund industry has performed since the beginning of this year, part of the decline in assets is due to the [fall in asset] valuations. Relatively speaking, we had small outflows,” he says.
The development and modernisation of Greece’s asset management industry in recent years helped it cope with the crisis. “I think it’s clear to our clients and investors that we manage very good products,” he says.
Nevertheless, a large proportion of assets under management are domestic Greek assets, and they are vulnerable should Greece default on its debt.