The French fund management industry is a well developed one and assets under management are growing. Both institutional and private investors have been using investment funds for a long time as part of their investment strategies or savings plans.
Recent developments in the market will he translated into more assets going into funds during this year.
According to data from Lipper, total domestic fund assets represented e487.5bn at the end of June 2001. During the second quarter of 2001 the fund management industry saw an increase in assets of e15.2bn, representing 3.2% growth.
All main categories of funds attracted new assets during this period but the most notable recovery was seen in equity funds, which saw a 4.3% growth during the review period.
Money market funds that saw an important increase during the previous quarter, rose less sharply during the second quarter.
The French fund management industry is dominated by the five large French players (see table 1), and little change has been seen in terms of market share in the recent past. Lipper data shows that the combined assets of the top five – CDC/Caisses d’Epargne/La Poste group, Société Générale, Crédit Agricole Group, BNP Paribas Group and Groupe Natexis Banques Populaires, increased by more than e10bn in the second quarter to stand at e273.4bn. This represents a 3.8% increase on the second quarter of 2001, which accounts for 66% of total assets added to the industry in the same period.
According to the survey Société Générale grew faster than all the others, mainly through its main subsidiary Société Générale Asset Management.
Even though the fund management industry in France has long attracted many foreign fund providers, this data show that domestic players are still in control.
Increasing interest among investors in funds of funds structures have opened the market to international houses and the development of the new company savings plans, Plan Partenarial d’Epargne Salariale Volontaire (PPESV), will push further the market as a whole and new entries from abroad. Managers expect important inflows in medium and long-term investment funds as a consequence of the introduction of these plans.
Another development that is contributing to the growth of foreign groups are the PEAs (Plans d’Epargne en Actions), equity saving plans that have attracted significant interest among the population. Even though PEAs have existed since 1992, a recent announcement regarding tax breaks for PEA subscribers investing outside France should benefit foreigners trying to break into the French market.
Third party distribution is also on the increase and on-line brokerage services offering access to domestic and third-party funds on a mass scale is now part of some of the French big players network.
In terms of fund size, the fastest growing fund during the second quarter was Fonsicav, managed by CDC Asset Management Europe, which saw a 41.1% increase in assets.