The chief executive of Axa Investment Managers, Dominique Carrel-Billiard, put Asia at the heart of the firm's global growth plans at a media briefing in Paris this Wednesday.
He outlined two specific initiatives on the manufacturing side of the business. Firstly its Framlington equities platform will hire a two-person investment team in Hong Kong and complement that with an undetermined number of relocations from the firm’s London office.
Secondly, the firm plans to relaunch the troubled Axa Rosenberg quantitative equity product, but having it specifically focused on Asian and wider emerging market portfolios.
Its Asia growth message is one it has spoken to AsianInvestor about before, through Axa IM’s head of sales and marketing for Asia, Terence Lam, and its global head of distribution Jon Bailie, who is London-based.
Axa IM is the second French-based asset manager to announce Asian growth plans in as many days, with AsianInvestor having broken the news that Natixis Global AM had opened an office in Hong Kong.
But Axa IM has lost people, too. Denis Gould was its director of investment for Asia and Japan, but exited in June last year to join HSBC Asset Management as CIO in Hong Kong for multi-asset and wealth; in May this year Manulife Asset Management hired Sarah Lu from Axa Rosenberg Investment Management Asia-Pacific in a newly created role as head of asset allocation for Asia. The same month it also lost senior Asia economist Hervé Lievore to HSBC AM.
Overall Axa IM has “grand ambitions”, says Carrel-Billiard. In Asia, that will largely focus on increasing organic growth and distribution of its existing products to clients in Hong Kong, Singapore, Australia and Japan. It is also looking to develop the three asset management subsidiaries it has in Indonesia, China and Korea.
Of the three, the Korean JV with Kyobo, is working the best. The business attracts $1 billion of new money every year and now has $13 billion in AUM. It follows the model used by Axa IM in Europe of managing captive insurance assets of a certain size, which then attracts good investment teams who produce good returns and therefore attract more third-party money.
The India and China JVs have faced more difficult times. In India, this year the firm has had to move JV partners from Bharti to Bank of India, after regulators took objection to the captive funds model. As a result, the JV is now pursuing a more retail-focused approach.
In China, a similarly retail focused JV was launched with Shanghai Pudong Development Bank in 2007 with investment products starting life in 2008 just as the market crashed. “We started at the wrong time and ruined the investment products,” admits Carrel-Billiard. “We need time to bring back a positive track record, although we do have nearly $1 billion in assets.”
The Axa Rosenberg relaunch will play a large part in determining the success of its Asian push. The platform is a quantitative equity manager, investing in 23,000 global stocks on the basis of automated analysis. During the financial crisis it emerged that the automation had a glitch, which then went unreported and unchanged. Clients withdrew some $50 billion from the manager.
With $20 billion still under management, Axa Rosenberg has some way to go to rebuild its reputation with investors. Axa IM will be marking it as a way for investors to capture what it calls smart beta from Asian and emerging market equities. “We can rebuild a vibrant platform,” says Carrel-Billiard.
The firm has no plans to undertake any acquisitions in the region, however, preferring to round out is product suite through team lift-outs. “Consolidation in the industry is not happening through acquisitions,” says Carrel-Billiard. “So why acquire it when you can steal it?”
Key to attracting strong investment teams – such as to Framlington in Hong Kong– will be the firm’s size and stability. With €548 billion under management, the firm is the 15th largest asset manager in the world.
Of that total, 68% comes from insurance assets managed on behalf of parent Axa Group; 20% comes from asset owners; and 12% comes from third-party distributors such as banks and IFAs.
In 2001, just 9% came from asset owners and 6% from distributors. “Right now our priorities are Europe and Asia,” says Carrel-Billiard. “We have to have focus.”