Brand awareness an important element of its strategy
Financial institutions with a strong parent matters these days, particularly as institutional investors seek the safety of large groups in the wake of the global financial crisis. Counterparty risks, as never before, are now a prime consideration when one wants to do business. "Investors want to see balance sheet strength and this is an issue that was not seen to be as critical before the global financial meltdown," says Jean-Pierre Leoni, the Head of Asia-Pacific at AXA Investment Managers (AXA IM), the wholly-owned asset management arm of the giant AXA Group.
The AXA Group reported global assets under management (AUM) of more than 1 trillion euros (US$1.4 trillion) last year. AXA was created in 1985 and through the last 25 years it has transformed itself into a global leader in financial services. It has been a truly remarkable journey, expanding through a series of mergers and acquisitions as well as collaborating through alliances and joint-ventures.
The architect of the group’s growth was led by its founding Chairman and Chief Executive Claude Bebear, who was succeeded by Henri de Castries in 2000. The AXA Group, which reported gross revenues of 90 billion euros last year, has about 96 million clients worldwide, drawn from every continent.
AXA IM has grown from managing the group’s assets, and it now operates a multi-expert model which offers a wide choice of tailor made investment solutions to the market. It has separate teams that serve the group and third party clients. "We are often asked where our commitment is within the group and we say that we are set up to compete in the marketplace just like everyone else," adds Mr. Leoni, who moved to Hong Kong to head up the Asia-Pacific business earlier this year from the firm’s Paris headquarters.
To be sure, AXA IM has had Asian clients for quite some time and has been managing a variety of strategies for institutional clients across the region, spanning the range of traditional, long only mandates for fixed income and equity to the alternatives sector.
"We are now in the process of adding more Asia-centric products to our line-up for our global and Asian clients given the opportunities that now present themselves," explains Mr. Leoni.
Diversification of portfolios, interrupted during the market disruption in 2008 and 2009, is back on track as institutional portfolios continue their search for yield enhancement and risk diversification.
Whilst traditional asset classes and strategies remain in vogue, other asset classes and strategies, too, are coming under sharper focus.
"Now, we are seeing more interest from institutional investors in the region not just for the traditional areas but also for private equity and real estate," observes Terence Lam, Head of Sales and Marketing, Asia.
In real estate, AXA IM has a strong edge in Europe and has leveraged off that expertise to build an Asian footprint from Singapore where it maintains a team of portfolio managers. Last year, the platform managed about 38 billion euros in real estate strategies and was ranked as the No. 1 European real estate manager and No. 2 globally.
In the private equity space, AXA IM has also built a track record in Asia – two asset classes are now seeing new inflows from pension funds and other institutional investors as they seek to diversify their portfolios.
In other areas, the high yield space is attracting interest in private banks and family offices. Globally, emerging markets equities are back in favour and pension funds are raising their allocations to this asset class. This is not surprising given their profile and their faster pace of economic growth in the years ahead compared to the developed world.
In the emerging market world, China and India make-up a huge part of the investment universe. AXA IM has established joint-ventures in both markets. "Our joint-ventures are fairly new, we are still in the process of building a domestic track record, once performance is stablised; we can then incorporate them onto our global platform," notes Mr. Leoni.
Going forward, it is the Singapore and Greater China region where AXA IM sees good opportunities for its suite of products. As part of its commitment and development in the region, it plans to open a representative office in Beijing next year to enhance its coverage on the Mainland.
While having a strong parent is comforting, it can sometimes dwarf one’s identity. "We all know that the AXA Group is well entrenched in the insurance world but AXA IM on its own is a major force and this needs to be appreciated and recognised," notes Mr. Leoni.
And this is where, says Mr. Lam, brand awareness of AXA IM needs to be boosted and raised in the region. "I think we can do more to enhance the awareness of our brand and that is something we are now addressing with the support from Paris," he explains.
As part of this move, the firm is also enhancing its relationships with global consulting firms. This summer, AXA IM tapped industry veteran Tim Gardener as Global Head of Consultant Relations. Mr. Gardener spent 33 years with Mercer before making the move to AXA IM. Jon Bailie, Global Head of Distribution, said the appointment demonstrated the attractiveness of the AXA IM brand and its business model and its ability to attract talent of such high quality. "The appointment of such an influential and extensively experienced professional re-asserts the importance that AXA IM places on the continued growth and development of its relationships with consultants and its institutional business across the globe," said Mr. Bailie.
Under AXA IM’s multi-expert model there are seven distinct platforms, each with a specialty focus. According to Mr. Leoni, performance is only one aspect in order to be able to compete successfully. Following the financial crisis, client expectations and demands have grown as well. "It is just not performance but we have to be consistent in the delivery of client servicing and that is why we are investing in new resources to boost our regional capability," he adds.