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Investing

Active managers get boost in Europe

Active managers continue to find new business in European countries as a steady stream of regulations has kept their strategies in demand across a variety of asset classes.

The European Commission and local governments have, since 2015, been allowing asset owners to gradually expand the diversity of their allocations by permitting them into new asset classes — in efforts to help them reduce the dependence on low-yielding government bonds and boost returns.

In France and Italy, specifically, defined contribution plan executives are moving to active strategies as regulators have compelled them to invest in companies that have a direct impact on the growth of the real economy.

For example, the French government is considering increasing the minimum investments the default options of retirement savings plans have to have in midcap- and small-cap French equity to 10% from 7%.

"Historically, employee savings plans have been risk averse, where personal savings were involved, but this could change with the government giving incentive in the form of an increase in a tax break (to participants) on these investments," said Christophe Granjon, deputy head of employee savings and retirement funds at Amundi in Paris.

Olivier Jesequel, a director at consulting firm, bfinance in Paris, added that "although we are seeing passive and smart beta strategies implemented in European portfolios, active strategies are considered critical to portfolio construction."

Money managers also have stepped into roles that banks held before the global financial crisis, including mortgage lending. More recently managers are facilitating commercial loans to small and midsize enterprises. Ottavia Sebastiani, director at bfinance in London, said "Private markets investment is a huge trend among Italian clients. All conversations revolve around private markets."