Regulatory constraints and lack of diversification in the French money management industry might be putting additional pressure on an industry already under threat from difficult market conditions globally, according to a Fitch Ratings report published earlier this month.
French money managers which reported an aggregate of €2.5 trillion ($3.3 trillion) in assets under management at year-end 2007 also need to better align their investment offerings with the needs of institutional and retail investors. Absolute-return and enhanced cash management strategies are both strategies that are being particularly challenged and should be significantly reviewed, according to the report, French Asset Management Industry Dynamics and Challenges.
The five largest asset management firms in France account for 55% of the (total) assets, said Charlotte Quiniou, director at Fitch Ratings fund and asset manager rating group based in Paris, in an interview. In comparison, the top five firms in the U.K. manage 25% of the total assets.
Then you have quite a large group of independent players, who are now at a turning point, Ms. Quiniou added.
Asset allocation strategies remain relatively conservative. About 57% of total assets are concentrated in fixed income, money market and enhanced cash strategies. The remainder is mostly invested in equity, with about 3% allocated to alternatives, according to the report.
Among segregated mandates, which comprise about 40% of total assets under management in France, only 25% is invested in equities, compared with a 40% average in the rest of Europe, according to the report.
France has one of the largest asset management industries in Europe, but investments are biased toward conservative asset classes such as money market and fixed income, Ms. Quiniou said. Asset allocation is not going to dramatically shift (towards less conservative investments) in the short or medium terms.