The French asset management industry has faced a 8.1% year-on-year slump in operating profit to €2.84bn at the end of 2016 from €3.09bn as of end December 2015, the French regulator AMF reported.
According to AMF, the decline in operating profit of the French asset management industry is due to the increase of operating costs (+1.3% yoy) and a drop in operating revenue (-0.8% yoy).
The regulator found out that French managers’ operating costs have risen by 18.9% over the four last years, reaching a total of €10.96bn at the end of 2016.
The global turnover of French asset management companies has declined for the first time since 2012, amounting to €13.81bn as of 31 December 2016. Though AMF noted that the global turnover recorded was still higher to that of 2012 (€11.26bn, +22%).
Commission fees dip
AMF’s research highlighted that management fees of French asset management companies have been trimmed by 3.1% in 2016 (i.e – €339m) to reach €10.77bn at the end of last year. France-domiciled collective management funds (OPCVM) have suffered a 3.3% drop in management fees, while a 0.2% decline in management fees was stressed in mandates.
AMF said the global commission fee in collective funds management has fallen to 0.481% from 0.539% in 2015 while that of mandates was set at 0.055% at the end of 2016 (versus 0.057% in December 2015).
Highest commission fees were seen in the offering of French investment services providers and entrepreneurial boutiques, both in collective fund management (1.422% and 1.329% respectively) and mandate management (0.450% and 0.458% respectively).
On the contrary, the asset management subsidiaries of banks, insurance/mutual insurances have the lowest commission fees (0.358% and 0.394% respectively).
French boutiques reporting operating losses on the rise
The financial income of French asset managers has amounted to €693m in 2016, growing since 2013 (+148.4% over three years).
However, AMF pinpointed that the number of asset management companies reporting a negative financial income has perked up 14.3% year-on-year, which means for the regulator that French asset managers’ surplus has been managed in a more dynamic way than it was in 2015.
Some 22.7% of French asset management companies have faced operating losses which have totalled €102m for the whole year 2016 (against €87m in 2015).
The share of asset managers reporting operating losses has not yet reached levels seen after the financial crisis of 2008 (25,3% in 2011).
AMF underlined that disparities were visible between asset managers facing operational losses. More than three in four companies (76.1%) that reported so, are entrepreneurial boutiques.
Among French managers having recorded operational losses in 2016, 40.9% of them had less than four years of existence. The figure is on the rise, said AMF explaining it by more local and international competition as well as by the consolidation trend seen in the market. That said, only 18.3% of managers established more than 15 years ago have reported losses, that share having dropped from 28% in 2011.