AXA IM CEO, Andrea Rossi: “We play to our strengths as an active manager”
AXA IM CEO, Andrea Rossi: “We play to our strengths as an active manager”
- 2017 AUM inflows driven by strong performance of Alternatives, specialist Fixed Income and Multi-Asset solutions
- A solid set of earnings delivered – underlying earnings grew by 14 per cent in 2017
- Significant investment maintained in product and digital innovation as well as in responsible investment
Key highlights / Statistical information(1) – 2017
In 2017, AXA Investment Managers (AXA IM) continued to deliver strong investment performance with 71% of the firm’s cross-border funds in the first and second quartiles in 2017(2). This was further evidenced by significant growth across a number of our key disciplines such as Alternatives, specialist Fixed Income products and Multi-Asset solutions which were in high demand from institutional clients while our Thematic Equity capabilities saw significant appetite from wholesale clients.
AXA IM saw solid growth of +14 per cent on a reported basis in underlying earnings at €257 million and robust third-party net new money inflows of €9.3 billion.
Assets under management (AUM) at the end of December 2017 were €746 billion, up 4 per cent or €29 billion compared with 2016.
Revenues were €1,284** million, up 6 per cent or €77 million compared with 2016, due to higher average assets and an enhanced product mix.
The continued robust inflows from the unit-linked business with the AXA Group also helped to reinforce partnerships with global distributors and resulted in further success with third-party insurers.
“2017 was a particularly strong year for us in terms of successes for our institutional business, leveraging our close relationship and the work we do for the AXA Group, while we also made advances in the retail space. In 2018, we will continue to focus on our strengths to accelerate our development through continued product innovation to match the evolving needs of our clients. Our expertise and capabilities as an active manager provide us with a crucial advantage in navigating today’s challenging markets and capturing the evolving opportunities driven by global megatrends.” commented Andrea Rossi, CEO of AXA IM.
Reinforcing AXA IM’s strengths as an active, long-term manager, as well as product innovation will be key for future growth
In 2017, AXA IM continued to innovate and enrich its client offering across its capabilities and product range. In Equities, Framlington Equities launched two thematic strategies driven by significant investor appetite in digital themes. The first launch built on the success of AXA IM’s Japanese mandate in Robotech, which has attracted €3.86 billion in AUM so far(3) and continues to grow. The second launch looked to capitalise on the global theme of the ‘Connected Consumer’ with the strategy investing across the Digital Economy value chain.
The Rosenberg Equities investment team implemented machine learning into their factor investing portfolios in October allowing them to take further advantage of big data tools in their portfolio management processes.
Regarding Alternatives, the newly launched Chorus investment team, based in Hong Kong, saw significant investor interest throughout the year following the launch of their first investment strategy –Multi-Premia– in April 2017. In addition, the second dedicated impact investment strategy – Impact II – which was open to third-party investors, raised €175 million throughout the year with a final closing this month(4).
In 2018, AXA IM will continue to focus on its Multi-Asset expertise, which was particularly successful with institutional clients in Italy and France in 2017, in order to deliver solution-oriented strategies to clients. AXA IM will also prioritise advancing its capabilities in Alternatives such as Structured Finance and Real Assets.
The Structured Finance team will look to build on their significant experience and successes to directly contribute to the financing of the real economy, particularly in commercial and retail loans and the Real Assets team will have a key focus on infrastructure and real estate in 2018.
AXA IM will also look to extend its Fixed Income offering by further diversifying the product mix and client base with a move to higher yielding assets and more flexible solutions. This will include adding total return credit products to the product range and continuing to grow the buy & maintain expertise as an alternative to passive.
Investing to support AXA IM’s corporate ambitions in digital innovation
AXA IM continued to invest in new technologies last year such as blockchain for fund distribution through a partnership with BNP Paribas Securities Services (BP2S). AXA IM also invested in several proof of concept projects, including some in collaboration with fintechs, related to automation, sales efficiency, better knowing and understanding clients and their needs, and enhancing alpha capture by portfolio managers – all with the purpose of employing technology to better serve clients.
On blockchain, AXA IM and BP2S have successfully concluded the development of a prototype for digital client on-boarding. The same project continues in 2018 with a focus on the delivery of a second module, focused on the fund trade aspect. To increase operational efficiency and the wellbeing of its employees, AXA IM has been working on the integration of intelligent automation into Operations. This work remains ongoing with the first virtual assistants going live in January 2018.
Joseph Pinto, Global COO at AXA IM, commented: “Asset management remains a highly competitive market. We recognise the need to constantly innovate to leverage the opportunities offered by new technologies to the benefit of our clients. There is no one ‘magic bullet’ when it comes to technology for the complex processes of investment management. Instead, we are looking to innovate across different parts of the business to maximise the impact new technology can have on the firm as a whole.”
Continued commitment to being a responsible investor, employer and business
Responsible investment (RI) continues to be a key priority. In 2017, AXA IM strengthened its Corporate Governance and Voting Policy. This reflects its continued commitment to RI and active stewardship on behalf of clients’ assets particularly in light of the increasing and material risks posed by climate change(5).
“We have chosen to go one step beyond engagement and discussion. We are taking a very strong stance on environmental and social issues and their management by companies. As an active manager, we want to play our part in the debates related to climate change advocating necessary changes at company level in the best interest of our clients’ assets in the short and long term. We believe we have an instrumental role to play to guide and support our clients in their RI decisions” said Andrea Rossi.
AXA IM’s active stewardship is in line with its environmental, social and governance (ESG) ambitions as a company. In 2017, Rosenberg Equities made significant progress in this direction as they fully integrated ESG across their investment portfolios. AXA IM’s new house policy on coal(6) and a climate policy reinforcing its stance on coal and tar sands in RI open-ended funds and available to third party clients on an opt-in basis(7) is another example of the company’s commitment. Finally, AXA IM’s Responsible Investment team has also developed a new and enhanced ESG scoring methodology for corporates and we will continue to significantly invest in RI capabilities and set-up in 2018.
“Being a responsible investor also means looking at how we operate our business internally. For example, we know that delivering on our gender diversity targets not only creates a more enriched work culture but is also essential to the commercial success of our business. Companies with higher levels of gender balance and inclusive cultures have better insights into their customers and market opportunities, make better decisions and perform better financially. This is an area where we are collaborating with our external peers to share best practice and drive progress collectively.” added Andrea Rossi.
Notes to Editors:
1) Significant figures detailed below:
|AUM||€746 bn||€ 717 bn||€669 bn||€623 bn||€547 bn|
|NNM||€7.9 bn***||€56.4 bn||€41.6 bn||€19.0 bn||€10.5 bn|
|Revenues**||€1,284 m||€ 1,207 m||€1,230 m||€1,125 m||€1,030 m|
|Underlying earnings||€257 m||€ 225 m||€234 m||€211 m||€172 m|
* excludes contribution from AXA Private Equity, sold in September 2013 as well as the related net realised gains
** figures referring to AXA IM’s revenues are net of distribution fees
*** the decline in net new money inflows is mainly due to a decline in inflows from AXA IM’s JVs, which was expected and driven in part by a number of products reaching maturity and not being replaced due to new regulatory requirements relating to our Chinese JV. It is worth noting that this is a low margin business so the outflows have had a very limited financial impact.
2) Morningstar, performance as at end of December 2017 on a three year basis – Note: past performance is not an indication of future returns or performance.
3) AUM as at end of January 2018.
4) Final close of the fund is in February 2018; AUM as at 8 February 2018.
5) The Policy now reads that where a company Board is considered to not have managed environmental and social issues appropriately or does not show evidence of proper governance of these key risk issues, AXA IM will reflect its concerns by voting against relevant directors standing for election or by not supporting the approval of the Reports and Accounts.
6) Coal policy: AXA IM committed to divesting from companies that derive more than 50% of their revenues from coal-related activities, effective 30 June 2017.
7) Climate policy: AXA IM strengthened its stance on coal and tar sands with a new in-house climate policy applying to all RI open-ended funds and on an ‘opt-in’ basis for third party clients for their dedicated funds and mandates. The new climate policy means divesting from companies that derive 30% or more of their revenues from coal. It also covers divestment from any companies that are significantly exposed to tar sands related activities – i.e. companies which derive 30% or more of their revenue from oil sands extraction or transportation. The climate policy became effective end of January 2018.
Jayne Adair +44 20 7003 2232 - Jayne.Adair@axa-im.com
Tuulike Tuulas +44 20 7003 2233 - Tuulike.Tuulas@axa-im.com
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