Asset management, key figures 2014 - Management companies overview
At 31 December, 2014, the number of authorised asset management companies (AMCs) in France stood at 634. This was a new record. The trend for the current year suggests that, except for a major event in the second half of the year, this record will again be broken by the end of 2015. But is this really such good news?
A deceptive record?
The answer cannot be summarised merely by reading the figures.
The entry into force of the AIFM Directive first played a significant role, in 2014, with the inclusion of numerous players already present in the field of asset management (specifically 12, i.e. 25% of all new approvals) in the universe of investment management companies.
These players, formerly SCPI (REIT management companies), SEF (Forestry Investment Companies) and FCT (securitisation funds), now operate under the unique status of asset management companies (AMCs).
The nature of the new approvals in 2014 still shows a bias towards asset classes such as securitisation or towards real assets (private equity, real estate and infrastructure). Among these new players, 7 were already operating in financial activity (e.g. through SCIs (property management) or certain SCRs (risk capital)). But before AIFM, this activity was not regulated by the Autorité des Marchés Financiers.
There remains the risk of a highly fragmented market, with a lot of small asset management companies.
While these aspects should temper interpretation of the continued growth of the population of French asset management companies, this increase for almost 10 years now must be emphasized.
An upward trend in terms of authorisation: evidence of strong activity of the Paris financial centre
This record clearly reflects the dynamism of the French asset management industry which continues to have a major role at world level.
This leadership in financial management once again underlines the advantages enjoyed by French managers: a large domestic market with a robust savings capacity, high quality academic training, competitiveness in terms of set-up costs, productivity and speed of implementation, a balanced regulation that protects savers but which seeks to support the development of players, etc.
Moreover, this momentum is manifested, as mentioned above, in an over-representation of entrepreneurial structures in the population (about 2/3).
This French peculiarity, far from posing a threat - it should not be forgotten that, in its ranks, France also boasts a large number of independent companies of significant size on a European scale and many representatives among the world's leading management companies - is viewed as a real asset.
It highlights the innovation capacity of French financial management and thus promotes, through different management approaches, better price formation and lower volatility - guarantees of confidence for investors.
Focus on .... the export capacity of French management
The performance achieved by French management companies in exporting their business beyond our borders is one of the least known aspects of the industry, even though it is experiencing fast and steady growth.
The vitality and capacity of French management companies in gaining international market share can be assessed through several indicators:
- Continued significant use of European "out" passports, driven by the enthusiasm generated in France by the implementation of the AIFM Directive (more than 300 AMCs were AIFM authorized at end 2014). No less than 183 passports were issued to French management companies in 2014 (including 106 under the AIFM Directive) for the management of foreign AIF. Likewise, 819 "out" marketing passports were reported in 2014 (marketing of UCITS and AIF products outside France);
- A presence beyond Europe's borders with 18 billion Euros of third country AIFs managed directly by French managers;
- An extremely low rate of management company "relocations" (only two authorisations withdrawn for this reason identified in 2014), reflecting the capacity of the Paris centre to remain a key management player, able to distribute its expertise and products from France.
Focus on ... AIFM reporting
To identify and monitor the risks borne by European asset management over time, the AIFM Directive introduced a new reporting requirement applicable to alternative investment fund managers (AIF).
This reporting requirement seeks information on the composition and leverage of portfolios and on their exposure to the various market and counterparty risks and the composition of AIF liabilities. The size of the management companies, the vehicles involved and whether or not the leverage they use is deemed substantial, determine the reporting frequency - annual, six-monthly and / or quarterly.
The first reports were collected in 2014. With the most recent submission, for quarter 1, 2015, 3,800 AIFs under the quarterly report requirement, representing 640 billion euros, i.e. 90% of the assets of French AIFs, submitted information to the AMF.
A focus on some of the salient points from these reports (to March 2015) will be released with the next key figures.
As part of its monitoring of the third party asset management sector, the AMF uses annual information sheets provided by the asset management companies (AMCs). These sheets contain quantitative information on managed assets and the products and charges related to management of third party assets in France. This information enables the Authorisation and Monitoring Division of the Asset Management Directorate of the AMF to perform analyses of the companies. Following the entry into force of the AIFM Directive in July 2013, European AIF managers are also subject to a new reporting obligation. The information collected relates in particular to the exposure of portfolios to different types of risk and is collected quarterly, semi-annually and/or annually. Although every care is taken in the compilation and processing of the data, due to the late receipt of some information sheets and possible input errors, some inaccuracies may still persist.
Asset management, key figures 2014
Each year, the AMF publishes a series of articles entitled "Asset management, key figures." These publications are available from the Publications > Reports, research & analysis > Savings & services section of the AMF website. Future key figures shall cover the following topics: the typical profile of management companies, assets under management, financial data for asset management companies and, finally, the control mechanism. A compilation of these five publications, enhanced with additional data and tables, will also be published.
Head of publications: The Executive Director of AMF Communication Directorate. Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02