FRANCE-French asset management companies saw their operating profits fall 20.4% in 2001 in spite of an increase in assets under management, reports the Commission des operations de bourse (COB), the regulatory agency appointed by the government to oversee the protections of investors.
In its annual review of asset management in France, the COB revealed that a 5.4% rise expenses and declining revenues of 2.4% caused operating profits to fall 20.4% in 2001, driving the operating margin down to 24.6% from 30.2% in 2000. Nearly 25% of management companies reported a net loss at the operating level in 2001. According to the review, start-ups and companies managing less than e250m were the worst affected.
Negative market impact on equities, problems of raising fresh capital and the effects of lower interest rates on money-market products are blamed for the setbacks experienced by the French asset management industry.
Despite the economic slowdown, however, assets under management in France increased by 7.3% in 2001. According to COB, the total under management at the end of 2001 was e1.6trn. Of the total AUM, 90% was accounted for by the top 46 management companies. At the other end of the scale, the 252 smallest companies had 1% of AUM at the end of 2001.
1,000 general UCITS were authorised in 2001 and assets under management in French UCITS increased by 4.5%.
In terms of asset classes, equity and balanced funds saw sharp declines, while money market vehicles accounted for more than half of new net inflows (and two-thirds since the beginning of 2002). Demand was also noted for multi-manager funds, exchange traded funds, structured and guaranteed funds and alternative management vehicles.
The number of asset management companies also increased in 2001. Altogether 59 new companies received authorisation from the COB, and at the end of 2001, 520 asset management companies were operating in France – a net increase of 36 firms.