FRANCE – French institutional investors are now more likely to select their fund managers using external consultants – slowly mirroring the British institutional market, according to research by bfinance.
Following a survey of 32 managers, the volume of the market for tenders stood €14.6bn in 2005. It stood at €22.7bn in 2004 following the Fonds de Réserve pour les Retraites’ calls for tender, but without this isolated incident, the market would only have stood at €7bn.
According to the consulting firm, this means the market has doubled year-to-year. A spokesperson for bfinance stated that the need for diversification is a big motivator for using consultants.
New actors in the French market, such as the FRR, and older actors are building up reserves that need to be invested, she said.
Furthermore, institutional investors are not just investing in bonds anymore, but also in new and diverse assets in France and across the world.
“They have to use consultants specialising in this,” said bfinance.
The survey revealed that Mercer is the most active consultant on the French market with 34% of the volume. Fixage had 27%, and bfinance with 21%.
However, the ranking differs when analysed in terms of the number of calls for tenders: bfinance leads with 20 RFPs (27% of the market), Mercer with 14 and 19%, and Amadeis and Hewitt each have 10 requests and 14% of the market.
In 2005, 75% of the total volume of RFPs surveyed by bfinance had been conducted by an external consultant – an increased of 5% since 2004, said a statement released today.
According to bfinance, in terms of numbers roughly half of the investors use consultants to select fund managers.