Money managers under the microscope
A new song has emerged in the European funds industry, born in the midst of the financial crisis. It is called “let’s all do a Carmignac”. It may not be quite as catchy as the Conga, and maybe not quite as much fun, but it has certainly gained a number of followers.
The fund performance and distribution strategy at Paris-based Carmignac warrant more column inches than are available here. But more broadly, it is well worth looking at some of the numbers that have led others to dance to its historically-unfashionable tune of mixed asset, balanced investing, as well as examining wider industry activity to see what insights can be gleaned.
The largest mutual fund in Europe – Carmignac Patrimoine – has generated net sales of around 10 billion euros ($14.05 billion) in each of the past two years. In both of these years this one fund attracted more than 50 percent of all sales activity across Europe (including those funds suffering redemptions) in its Mixed Assets sector. And even if only those funds generating inflows are compared, the fund drew in around 30 percent of sales in the sector.
Not only has this fund hoovered up huge quantities of investors’ money, but it has happened at a time when other, apparently similar, funds have been largely out of favour. Patrimoine’s ability to generate positive returns in recent dramatic market downturns is clearly crucial in attracting this level of loyalty, particularly as it is not from the new breed of unconstrained ‘absolute return’ funds. It has put its relative success down to well-timed overweight allocations to emerging markets.