L'apport de la notation qualitative

Transcription

1 Gestion d actifs L'apport de la notation qualitative Fund and Asset Manager Rating Group Présentation à l Af2i

2 Agenda Fitch in Asset Management Methodologies Examples Asset Management in Europe

3 Corporate Overview and Structure 50% 50% 100% 100% 2

4 Fitch s Fund and Asset Management Group A global group of 50 dedicated analysts covering over 60 asset managers and 800 funds globally Team based in London, Paris, Frankfurt, New York, Chicago and throughout Latin America with ability to collaborate with and leverage knowledge of analysts across Fitch Strong cumulative team experience with senior analysts experience averaging over 15 years Extensive global and local market knowledge, built over 15 years of rating funds and asset managers (100 managers, managing approx. 5,000 funds) Extensive network of key industry contacts Many team members possess analytical experience gained direct from asset management positions 15/02/2013 3

5 Global Presence New York Toronto Chicago McLean San Francisco Austin Tampa Monterrey Mexico City San Salvador Guatemala San Jose Quito Lima La Paz São Paulo Santiago Buenos Aires Bogota London Milan Madrid Barcelona Tunis Istanbul Caracas Rio de Janeiro Montevideo Stockholm Warsaw Frankfurt Paris Sandton Dubai Moscow New Delhi Mumbai Hyderabad Bangalore Jakarta Kolkata Chennai Colombo Beijing Seoul Tokyo Taipei Hong Kong Bangkok Singapore Sydney 1/15/12 15/02/2013 4

6 Fitch Offers Full Coverage in Fund Management Money Market and Bond Fund Ratings Fund Quality Ratings with Asset Manager Ratings Capital protection-oriented Investment process-oriented Operational risk-oriented Assigned at the fund level Assigned at the fund level Assigned at the asset manager level 1/15/12 15/02/2013 5

7 Fitch s research 15/02/2013 6

8 Recent Research All Fitch research can be found on our website under You can opt-in to receive Fitch research. It is FREE OF CHARGE! Credit Strategies (Jan 2012) Multiasset funds (Oct 2012) Managing Convertible Bond Funds (Sept 2012) European Cross Border Fund Ranges (Sept 2012) SRI Criteria no Substitute to Solid Fund Management Processes (June 2012) Stock-pickers Searching for Growth, Confirming Change In Style (June 2012) Sector Update: Corporate Credit & High Yield Funds (May 2012) Passive Funds: Fund Quality Rating Considerations (May 2012) Rating Smaller Asset Managers (May 2012) Managing Emerging Market Debt Funds (April 2012) 7

9 Agenda Fitch in Asset Management Methodologies Examples Asset Management in Europe

10 What Public Information is Available? DDQ, RFPs Prospectus KIID Marketing material Factsheets Performance ratings «Journalistic» research

11 Designed for investors Asset Manager Ratings Firm Operational set-up Fund Quality Ratings Fund Investment process 15/02/

12 Fund Quality Ratings A one-stop analysis covering operational aspects, investment process and track-record Broadly applicable across fund types and asset classes globally, including newly launched or less conventional funds With fund performance analytics powered by 15/02/

13 A Modular Approach Qualitative Assessment (incl. operational and legal) Strong Satisfactory Weak Track Record Strong Satisfactory Weak 1/15/12

14 Qualitative Assessment: Operational & Legal Service Providers Regulation, Governance Valuation Fund Terms Pass/ Fail Conflicts of Interests Transparency 1/15/12

15 Qualitative Assessment : Process, Resources, Company Investment Process Research Operational and Legal + Decision making process Portfolio construction Monitoring Operational workflows Resources Staffing Technology Company Qualitative Assessment Strong Satisfactory Weak Strategy Experience & Commitment Financial Resources 1/15/12 15/02/

16 Historical Track Record Based on 3-5 year Lipper Consistent Return Leader or other sources and metrics, when Lipper peer group analysis is unavailable or when helpful analytically A transparent approach to overlay qualitative assessment with historical track record Uplift if track record is particularly strong (eg Top Lipper Leader score over 5 years) Adjustment downward if track record is particularly weak (eg Bottom Lipper Leader score over 3 years) No change if track record is neither particularly strong or weak 1/15/12 15/02/

17 Funds With Short or No Track Record Funds which do not have 3 year track record may be rated If the fund is a clone of another fund - Fitch will consider the track record of the cloned fund to assign an FQR rating If the fund is not a clone of another fund but has a comparable fund - Fitch may consider the track record of the comparable fund to assign an FQR Rating - However, the ability to achieve Fitch s highest rating may be constrained If the fund is not a clone of another fund and does not have a comparable fund - Fitch will assign a Qualifying FQR rating if qualitative and operational criteria are met 1/15/12 15/02/

18 Rating and Review Process 1.5 MON NTH MAX Screening On-Site Review (3-4 hours) Analysis Rating Issuance Operational and legal screening Review and assessment of documentation Interview PM & other key staff Desk visit Review internal documentation Completion of qualitative rating analysis Analysis of performance (Lipper data) Rating committee validation & decision Communication to manager Press release to media & investors Publication of rating report Manager Contact Dialogue maintained with manager throughout rating process Investor Contact ThomsonReuters platforms Fitch website Analysts interact with investors Surveillance Quarterly updates Monthly performance analysis Annual review & update Rating announcement via press release

19 Output Five page report updated at least annually Fitch overall opinion, based on proprietary scorecard Lipper Leader Performance metrics Assessment rational by criteria Updates via press releases or commentaries as and when necessary Multilingual research meets cross-border distribution requirements

20 Fund Quality Ratings published on Thomson Reuters Eikon Fitch s Fund Quality Rating Report Fitch s Asset Manager Rating Report

21 Fitch s vs. competition Scope Fitch Morningstar S&P Capital IQ Qualitative Precise criteria Focus on process robustness vs. fees, star PM Criteria covering operational set-up Execution Local contacts, global footprint Flexible execution (review cycle) Output Open global distribution Six pages detailed output Beyond the rating Technical events with PMs Research fees only Institutional DNA since 1998

22 Fitch s Asset Manager Ratings

23 Asset Manager Ratings A third party assessment of an asset manager s operational set up. Complemented by Quality Ratings on individual funds and investment strategies to address strengths of investment processes With straight to the point report («a third party RFP questionnaire») Using standard documentation complemented by reasonable investigations 15/02/

24 Coverage 60 rated managers including International Diversified Managers such as BNPP IP, Schroders IM, DB Advisors, La Française AM Specialists Managers such as SEB (Real estate), Sciens Capital (Alternative), ECM (Credit), Alcentra (Credit), Avoca (Credit), Sycomore AM (equity) Domestic Managers in Brazil, China, Turkey, Morocco, Thailand 15/02/

25 Minimum prerequisites Proper regulation Minimum operating history Known custodians, administrators and auditors Third-party audits Vehicles with segregation of assets, trustee duties and legal documentation Separation of functions Clear corporate substance (premises, owners, executives, employees, incorporation, legal documentation); and clear portfolio management responsibilities (eg company does not outsource portfolio management to a point where it is simply an intermediary).

26 Transparent Criteria Company and organisation : shareholders, business resilience, experience, governance, staffing Controls : control structure, operational risks, compliance, controls on transactions, execution, conflicts of interest, investment risks Investments : resources and discipline Operations : client servicing, trade transmission, reconciliation, booking, valuation Technology : security, front office, middle and back office systems

27 Assessment Process Review of documentation Interviews (typically 1 day for small size manager) On-site reality checks (system demo, file reviews) Background checks Ongoing monitoring

28 Output A third party RFP questionnaire Updated annually Ad-hoc commentaries Managers can use the rating seal and report in their material (RFP, website)

29 Updated Output A third party «RFP questionnaire» Updated annually and complemented by ad-hoc commentaries Bullet points with focus on key findings Key findings Graphical elements Profile Bullet points

30 Requested documentation Standard due diligence questionnaire or RFP Last audited financial statement Operational losses, errors and near errors in the last 3 years Sample of operational procedures Sample of minutes of risk management/compliance/audit committees Sample of external reports (audit, SAS 70, FRAG 21, supervisory body) List of brokers/counterparties with volumes Transaction and trading volumes Representative set of internal investment risk report Sample of investor reporting including performance analysis report

31 Agenda Fitch in Asset Management Methodologies Examples Asset Management in Europe

32 A self-contained front page Key findings Lipper ratings Facts Analysts details Track-record

33 The investment process Statistics

34 The investment process

35 The resources

36 The company

37 Operational set-up

38 Trends in the European Trends in the European fund industry

39 Post-crisis Growth under Pressure European Assets Under Management (USDtrn) Low Post-Rebound Growth Cumulated net inflows in European domiciled funds (excl. money market funds) (EURbn) Jul 12 Some pockets of growth: UK, Switzerland, German institutionals Asset values are converted using 2011 average USD exchange rate Source: Boston consulting Group Source: Fitch, Lipper

40 Boutiques taking bigger slice of the pie 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 60+ funds funds funds < 10 funds 0% Aug Cross-border long term funds only

41 Innovation over rationalisation 5,000 2,500 No. of funds - -2,500 Launches Closures/mergers Net Change -5, H1

42 Changing Allocation Globalisation Accelerated Globalisation of Bond Fund Segment (%) Global Europe Jul 12 Source: Fitch, Lipper Global, Income, Multi-Asset Recent flows have favoured global assets, income and multi-asset funds Global, income or multi-asset? Lipper fund sector 2011 net sales (EURbn) Money Market GBP 23.8 Bonds Global Currencies 16.4 Source: Lipper Equities Germany 12.5 Asset Allocation 12.0 Money Market USD 7.1 Equities Global 6.3 Target Maturity Euroland 6.2 Bonds Global Corporates 6.0 Bonds Emerging Markets 5.4 Equities North America 3.7

43 Launch activity European fund launches Offshore, France, Germany, Switzerland, UK 100% Bond domestic Equity domestic Equity international Mixed asset Credit and EM Bond international Absolute return 90% 80% Yield and AR 70% 60% 50% 40% 30% Diversified 20% 10% 0% Domestic bricks Source: Fitch, Lipper

44 International Competition European Funds Industry Shift to Cross-Border (Asset breakdown in %) Fund Flow Concentration European domiciled funds July 09 to July 12 flows 100% 80% 60% 40% 20% 0% Domestic Cross-border Equity Fixed income Mixed assets (%) Managers with inflows (%) Inflows with top 10 firms (%) Cross-border: Funds sourcing more than 20% of assets from a second market Source: Lipper Source: Fitch, Lipper

45 Cross-Border Illustrates Excessive Diversification Cross-Border Fund Ranges by Proportion of Funds >EUR1bn As of June ranges with more than 5 funds (%) Need Rationalisation: 60% Need focus: 27% Well positioned: 13% No flagship [0-5%] [5-10%] [10-15%] [15-20%] >20% Source: Fitch, Lipper

46 Post crisis focus on risk management and operations Better liquidity asset/liability matching Enhanced counterparty selection and monitoring procedures, including collateral Stronger risk oversight, including risk reporting and portfolio review committees More integrated risk management focused on P&L, stop-losses or budgeting More comprehensive investor reporting Less fragmented IT backbone 15/02/

47 Now is time for strategic review Investors demand and market context Credit Investment solutions Global equity/bond Non directional equity/credit Multistrategy fixed income Low risk/income multiasset Equity themes Self assessment track-record continuity staff critical size flagships differentiation Action plan Strenghten Scale down/outsource Expand selectively Acquisition/lift out 15/02/

48 Market Context Credit (IG, HY, loans) Investment solutions Global equity and credit Equity themes Low risk/income multi-asset Non directional equity/credit Multistrategy fixed-income

49 Investors demand focus on fixed income Institutional 8trEUR institutional reallocation heatmap UK PF (allocation expectation) Non UK PF(allocation expectation) Insurers (impact of S2) Approx. size (bneur, end 2011) 2trEUR 1trEUR 5.1trEUR Gvt bonds (notably inflation (notably inflation linkers) linkers) Credit (notably HY and EMD) (notably HY and EMD) (only IG) Property ~ Equity Cash ~ Others - TAA (DGF) ~ ~ - HF and FoHF ~ - PE ~ - Infrastructure Source: Fitch, Mercer Asset Management Survey 2012, Economist Intelligence Unit Keys: Based on surveys, ++ : more than 10% (N# voting increase minus N# decrease) ; + : 0 to 5% (increase minus decrease); ~: immaterial or irrelevant ; - : 0 to -5% (increase minus decrease) ; -- : more than -10% (increase minus decrease) Retail Low risk, income, diversified 15/02/

50 Assessing own strengths Be objective track-record, continuity staff critical size, flagships differentiation Be realistic Counter example 1 : US equity Counter example 2 : investment solutions 15/02/

51 Focusing the business Strengthened resources Increased critical mass Heightened commercial efforts Adoption of international standards Scaling down/outsourcing 15/02/

52 Expanding selectively In neighboring activities high yield into loans and vice versa, diversified income for a European equity manager, stock and bond picking into absolute return. 15/02/

53 Investing in opportunities Structural trends like globalisation and desintermediation Growth in global products, emerging markets, direct lending, real assets Significant resources needed (local analysts, sourcing channels, technical and legal knowledge) Acquisition and team lift out preferred Many asset managers do not have the strategic bandwidth to make such a move 15/02/

54 Key Takeways AUM growth won t benefit everyone Changing asset allocation favors income, multiasset, global products International competition leaves little room for second tier players After focus on risk management and operations, now is time for a serious strategic review Key areas are investment solutions, credit, global products, multistrategy fixed income, low risk multiasset, equity themes Asset managers will focus/scale down, expand selectively, invest 15/02/

55 Disclaimer Fitch Ratings credit ratings rely on factual information received from issuers and other sources. Fitch Ratings cannot ensure that all such information will be accurate and complete. Further, ratings are inherently forward-looking, embody assumptions and predictions that by their nature cannot be verified as facts, and can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed. The information in this presentation is provided as is without any representation or warranty. A Fitch Ratings credit rating is an opinion as to the creditworthiness of a security and does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. A Fitch Ratings report is not a substitute for information provided to investors by the issuer and its agents in connection with a sale of securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch Ratings. The agency does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS AND THE TERMS OF USE OF SUCH RATINGS AT /02/

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