A decision by an insurance company in France recently to cap the share of investments that customers can put into its euro-denominated insurance funds is of high interest to asset managers in France.
For years asset managers have faced strong competition from insurers and banks, whose savings and investment products can offer enhance rates of interest and capital guarantees.
But Generali France’s decision to cap investments in euro-denominated funds is seen as a sign of how difficult it is for insurers to offer enhanced rates in a low-yield environment.
Guillaume Lasserre, chief investment officer of Paris-based asset manager Lyxor, says: “Guaranteed insurance funds are strong competitors for all asset managers in France, but returns have decreased over recent years and now the asset management industry may have the opportunity to propose an alternative. There could be a big change if distributors start to offer investment funds.”
In our recent French report, Lyxor told Funds Europe it was “working on” a conservative mixed assets fund with an equity portion of between zero and 25%.
CPR Asset Management, a subsidiary of Amundi, is focusing on its thematic funds, both abroad and at home where the French equity-owning culture is said to be traditionally weaker than in some other comparable countries.
Meanwhile, La Française Investment Solutions (LFIS), with AuM of around €13 billion, has begun marketing a multi-asset fund to the public. LFIS’s Perspective strategy is exposed to European equities and is based on an existing six-year-old strategy initially managed for an insurance company client.
Although asset management in France could receive a boost, difficulties with getting the public to take more risk are still anticipated.
Sofiène Haj-Taïeb, co-founder and chief executive of LFIS, says: “Interest rates have become more and more negative but the Livre A [a traditional French savings account] has not gone into negative territory yet, so there’s still a challenge for asset managers, and given that last year was very difficult for multi-asset funds, it could be even more difficult this year to convince investors to switch from bank and insurance products.”
Matthieu Duncan, vice-president of AFG, the French asset management association, says the range of investment accounts on offer in France generally does not incentivise the French public to choose riskier investments. There is a lot of debate at the AFG about this, he adds.
“Although the returns have been decreasing over the past few years, there are still returns of 1.5%-1.6% available on insurance products – and in some cases, that’s with a capital guarantee.”
*Read our French report here.
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