630 management companies were authorized in France at the end of 2017 for a total of assets under management of over 3.800 billion euros.

Assets under management in France reached a record level at the end of 2017

The Autorité des marchés financiers is publishing its overview of management companies for the year 2017 on Tuesday. Here is what we can learn from it.

Six hundred and thirty management companies were approved in 2017

The number of portfolio management companies (PMS) approved in France is stabilizing. They were 630 at the end of 2017 – as at the end of 2016 -, of which 83% are based in Paris. 35 SGPs had their authorization withdrawn last year, a historically high level, “confirming the consolidation movement in the industry that began in 2016”, underlines the AMF. The creation of structures (most often entrepreneurial) compensated for this attrition. 35 new asset management companies were created in 2017, of which nearly two-thirds (or 23) in private equity and real estate. The activities which have progressed the most since 2010 are the selection of receivables and the granting of direct loans. The latter concerned 20 SGP at the end of 2017. In general, the proportion of SGP intervening in real assets such as real estate, private equity, unlisted debt, has been growing steadily for several years.

The return of quantitative management

20% of new PMS creations focused on “sophisticated” strategies, in particular quantitative strategies. The return of this type of management seems to be confirmed in the first half of 2018, driven by “technological and financial developments such as virtual currencies for example, and the relocation to France of entities established in the United Kingdom. “

Growth in outstandings is comparable to that of the pre-crisis years

Assets managed by asset management companies in France reached 3.838 billion euros at the end of 2017. In 4 years, they have increased by nearly 35%, a dynamism reminiscent of the pre-crisis years. The context is well known: favorable stock markets, low volatility and historically low rates have whetted investor appetites. It is essentially collective management which is at the origin of the movement. Assets under mandate management even decreased slightly, for the first time since 2011.

The sector is driven by the dynamism of collective management

Thus, while the share of the portion of management under mandate has continued to decline since 2013 (-4.2% on average), at the end of last year, funds governed by French law (1.796 billion euros of outstandings) and foreign funds managed in France (436 billion) represented 58% of total outstandings under management. The number of funds, it tends to decrease, in particular because of “the rationalization of the range of products operated by the asset management companies in order to allow a better readability of these for the investors”

Asset management employs over 17,200 people

The asset management industry remains very dynamic in terms of jobs. The staff of SGP has grown by an average of 3.5% each year since 2013 (+ 4.5% in 2017) to exceed 17,200 people as of December 31, 2017. First, the sector has a growing need for professionals dedicated to support businesses and in particular internal control and compliance functions. In comparison, the share of managers in the overall workforce is steadily declining. Then, entrepreneurial management companies “capture a growing share of the workforce”. However, their share remains in the minority. Half of the sector’s employees and 40% of managers are concentrated in the 30 largest management companies in terms of staff.

Entrepreneurial companies represent more than two-thirds of asset management companies but less than a third of outstandings

The AMF notes that several trends are emerging among the players: entrepreneurial companies “developing niche strategies”, subsidiaries of “generalist and large” credit institutions, subsidiaries of insurers or mutuals “specialized in mandate management ”.

Entrepreneurial companies in particular represent more than two-thirds of asset management companies. Their number is increasing faster than that of other categories of actors (+ 4% on average since 2009). And with 286 billion euros under management (+ 15% in 2017 and + 11% on average since 2009) they manage a little less than a third of outstandings. These structures are divided into two categories: recent companies, specializing in often innovative niche strategies and asset management companies which have existed on average for 10 years and which have larger amounts outstanding.

The strong growth in assets “confirms the entrepreneurial tropism of the French asset management industry with more and more former employees of large financial groups wishing to use their reputation and expertise”, underlines the AMF.