Credit Agricole Asset Management changed its name from the previous Indocam earlier this year, as part of the painstaking approach of one of France’s largest banks to prepare itself for a public listing of shares. Ian McEvatt, head of CA-AM in London hopes to benefit from a halo effect from the publicity surrounding the listing which is expected before year-end. Being firmly anchored and labelled as part of the group will give his operations an underpinning of financial substance and stability. “Particularly when pitching for business, this aspect is increasingly important.” Where the intervention of consultants in manager selection is increasing, to have this advantage can only help. “This is highly important in Germany and other continental markets, where financial substance is considered virtually essential,” says McEvatt.
“Our business in the UK was established to take advantage of the investment ‘gene-pool’ in London, the major investment centre in Europe. We also wanted to be nearer to certain key markets and these were the primary motivations for opening here”, he says. Last year, Premium Management was acquired for its specialist fixed-income management skills. “We took this opportunity because we felt the two businesses were highly compatible. We are not just in the business of buying assets. We completed late last year and have spent much of this year integrating the businesses.”
CA-AM has a total of E160bn under management of which about E6bn is managed directly in London, including the E1.2bn brought in with the new acquisition. “Global fixed-income is the principal portfolio management activity here, driven by proximity to the international bond and foreign exchange markets. This is an exceptional competence we have which we direct towards the London insurance industry. We also house a substantial part of our alternatives business. This is a ‘fund of funds’ activity investing in hedge funds and private equity. We have had considerable success in this field, especially this year in Germany with a highly successful offering by Dresdner Bank.” McEvatt points out that the experience with hedge funds goes back to the early nineties, with the Caisses Regionales in France. “We have long-established capacity with experienced managers and successful strategies.”
McEvatt, who is also responsible for development outside France, says that beyond the UK, continental Europe is the key market. “It is embryonic, basically with superannuation reform being at various stages in the different countries. While it is a playing-field with relatively low barriers to entry, it is by no means level. “Opportunities for growth there are enormous, but with the challenge of encountering a different array of competition in each country. With a different competitive alignment in each country, life can be highly stimulating and interesting, to say the least. The fact that it is far from being a uniform market renders it very attractive business to develop.” Germany and Scandinavia are very attractive to CA-AM, as are Italy and Spain. “But we also remain very committed to the Netherlands which is a relatively well-developed market compared to others”. He wonders whether in Germany the historic dominance of the major indigenous institutions won’t trigger explosive demand for better opportunities for returns, previously unfulfilled.
“We have people in Germany, also covering central Europe, in Stockholm and Helsinki as well as more recently in Brussels, covering the Benelux region. In Italy we have a cooperative venture with Credit Agricole Indosuez, our affiliated bank and are building on the same model in Spain.” With the Indocam legacy, there is a heavy commitment to Asian business, with some $2.3bn (E2.5bn) managed through the offices there, including investment trust business in Japan with one successful fund launch and another under way. “That’s a bit short of the peak we had of $4bn,” he points out ruefully. Asia, which used to be an essential part of international asset allocation, now fights for attention. He fears it might be lumped together with emerging markets and alternatives.
CA-AM’s big investment centre is, of course, in Paris and it is heavily committed to the French market. “Our business is dominated by the immense power of our domestic distribution.” Maybe 75-80% of the group’s business is French, he reckons, and traditionally heavily fixed-income but the balance is tilting towards equities. “The equity culture is definitely spreading there,” he says.
“What we offer in European countries will depend on the local appetite.” But there are trends: traditional demand for balanced product, in France and the UK, for instance, is giving way to specialised products. Some European markets are heading straight down the specialised road, McEvatt maintains. “It will be European equity product or international fixed income; it certainly won’t be global balanced.”
CA-AM is seeing strong growth in Euro-zone product, especially euro fixed-income, where their capacity is “…massive; it is very sophisticated and very good.” McEvatt sees continental houses having a slight competitive advantage in this area, where London may be perceived to be on the periphery.
“In June we introduced an equity product driven off our proprietary research and this is creating a lot of interest amongst major institutions. The development of buy-side research is a very important movement and we were one of the early entrants in the field. We now have a full industry-based team located in Paris and London and a funded track-record of almost two years. Our commitment to this was originally part of our search for incremental value-added in portfolio management. The apparent benefit prompted us to fund a research portfolio and client interest then encouraged us to find a way to introduce a front-line product. We now have a segregated portfolio structure and a fund class in our Luxembourg complex, CA-Funds.”
“Our current development strategy is directed heavily towards organic growth. We are not consolidators or asset accumulators, so we are not on every investment bankers dance-card. Acquisition strategy is based on complementarity: we look to add competence or market presence which will enable us to leverage our core business.” The institutional market is the core of CA-AM’s international effort but this must now include wholesaling to distribution networks. “The growth of unit-linked insurance and defined-contribution pension arrangements is driving investment decision-making relentlessly towards the individual investor.”
McEvatt and his team are tuned into the emerging equity culture, as well as to the burgeoning alternatives sector “where we do excel”. This is a relatively small but very fast-growing sector, more so on the continent than the UK. “..but no matter when a Credit Agricole listing comes, we are open for business in the meantime.”