This is a guest blog post by Jag Alexeyev, head editor and author of Strategic Insight’s international publications on fund management and the architect behind the Simfund Global analytical platform.
By Jag Alexeyev
The meteoric success of Carmignac, an investment manager based in Paris, is forcing the industry to think again beyond its box. In just one year, Carmignac’s flagship fund went from #40 in assets in Europe to number one. Overall the boutique captured $15 billion of net inflows through the summer, while many other companies struggled to get back on their feet. How did they do it, and what does it mean for the industry?
Strategic Insight’s client engagements and published research in recent weeks delved into the many factors behind Carmignac’s success, from (not so) simple performance results to the rising importance of balanced and asset allocation structures, long-term brand building, steadfast investment focus, clarity of message, and a distinct distribution approach. Their story has resonated not only in Europe, but also in major cities such as Boston, where we just finished a round of meetings. It also spread as far as India, where the media tuned in to how much Carmignac was putting into their stock markets in search of higher returns, a common theme uniting emerging markets with the rest of the world today.
While the manager’s progress offers many lessons, it also means that other fund managers no longer have the same old excuses for marketing failure. If a relatively tiny firm situated in the ritzy Place Vendme can grow to become the highest selling manager in Europe, why can’t others with more resources do better? Many are rethinking what it takes to be successful in the investment business, especially in the shadow of mega deals such as Blackrock and Barclays. Although the new BGF funds group is quite a bit bigger in assets, Carmignac has captured more inflows to its long-term funds this year — indeed, twice as much if ETFs are excluded.
If all the issues raised by this aren’t enough, fund executives are contending with a slew of additional challenges today, from hedge fund managers aggressively seeking to offer alternative UCITS products to a reappraisal of constant NAV pricing of money funds. On the bright side, industry flows rebounded strongly worldwide between April and July. But financial markets have come far too, leaving some advisors with more questions than answers about what to do next for clients, and more hard work for fund managers to guide the way.
About Jag Alexeyev, Senior Managing Director & Head of Global Research, Strategic Insight
Jag Alexeyev directs Strategic Insight’s global investment industry research and consulting effort. Leading the group’s global expansion, Alexeyev is also the head editor and author of SI’s international publications on fund management and the architect behind the Simfund Global analytical platform.