Multi-management for French framework
A good multi-manager has to have a passion for alpha, disdain for the benchmark and attention to detail. It could have been made for the French
The concept of multi-management is uniquely suited to the French mentality. It requires finely-honed mathematical and social skills from distributors. These banks and insurance companies must be able to dispassionately choose the best third-party funds, yet develop arms-length partnerships with some of the key providers.
It involves an elusive combination of rigorous checks and attention to minutiae in an often bureaucratic due diligence processes, coupled with the need to meet many third-party groups, sometimes over a glass or a steak tartare.
It attracts the leading proponents of Gallic sang-froid, men like Thierry Callault of Ofivalmo, Jean-Luc Paraire at Crédit Agricole and Daniel Roy of Natexis. These are all seasoned players who love the science of fund selection, who are passionately devoted to alpha production, and have a healthy disdain for benchmarks. Yet they must remain calm and focused when assessing new trends.
In public, they are manufacturers foremost, producing the best possible combinations for a demanding institutional clientele. In private, the story is different. They acknowledge their real growth will come from the retail market place, by distributing funds through their own and competing branch networks and insurance companies.
They play a daily, delicate game of negotiations and diplomacy with shareholders. They must provide products first for those who pay their wages. In the case of Mr Roy, he has a huge branch network of Banque Populaire to service. Crédit Agricole’s merger with Credit Lyonnais has also given a much wider stage on which Mr Paraire must perform.
All three men have staked their reputations on the concept of open architecture, although publicly, they don’t all tie their colours to this particular mast. But Mr Roy acknowledges that Natexis Asset Management, which runs ?95bn, cannot carry on growing indefinitely through managing specialist asset classes for institutions. This may dent profitability as assets grow.
He is spending more time now promoting his multi-management baby, Natexis Asset Square. This oversees just ?3bn, predominantly in third-party funds. Mr Roy believes that open architecture will be such an important influence on growth of managed assets right across Europe, that now is the right time to expand outside France.
Rather than exporting its French expertise, Natexis is looking for a partnership with a wealth manager in the UK, which already has distribution tentacles and relationships elsewhere. Few who know Mr Roy, would doubt the shrewdness of his decision. Time will only tell whether the other Parisian pace-setters will take the same route.
