AXA IM demonstrates continued consistent growth driven by third party client inflows [VIDEO]
- Record net new money inflows of €42 billion dominated by third party assets
- Assets under management totalled €669 billion
- Investing for growth – becoming a truly global asset manager
AXA Investment Managers (AXA IM) continued to demonstrate strong commercial momentum in 2015 with record net new money inflows of €42 billion(1). AXA IM’s assets under management (AuM) at the end of December 2015 were €669 billion up 7 per cent from €623 billion in 2014. The growth was driven by third party client inflows demonstrating AXA IM’s continued focus on meeting client needs in a complex market environment.
Andrea Rossi, CEO of AXA IM, commented on the results: “Our consistent growth over the past 4 years is a result of our focus on growing third party assets while continuing to meet the needs of the AXA Group around the globe. With inflows of €42 billion, 2015 saw a further acceleration in our third party assets with Asia Pacific continuing to make a significant contribution to net new money, as well as strong inflows into our fixed income, multi-asset and alternative (real asset and structured finance) strategies. We had notable successes in the retail and insurance markets which will remain key segments for AXA IM in 2016 and beyond. These strong financial results not only reflect our solid investment performance, but also our focus on innovative products and services and an emphasis on partnering with clients to meet their evolving needs.”
AXA IM’s assets under management at the end of December 2015 were €669 billion, up 7 per cent compared with 2014. This increase in assets came from record net new money inflows of €42 billion and a €37 billion combined market and foreign exchange rate impact and was partly offset by the negative impact of €33 billion related to the partial withdrawal of the Friends Life assets(2). Net new money inflows of €42 billion represent a 120 per cent increase on 2014.
Revenues were €1,230 million, up 9 per cent compared with last year, due to increased management fees as a result of the rise in average assets(3). AXA IM increased its operating income by 4 per cent generating underlying earnings of €234 million, up 11 per cent compared with 2014.
Another year of strong financial results reflects solid investment performance across AXA IM with 79 per cent of our funds ranked in the first two quartiles over 5 years and 66 per cent of our funds rated 4 or 5 stars by Morningstar(4).
Investing for global growth
In 2015, AXA IM continued to invest in selectively growing its geographical footprint, hiring over 100 new employees across the distribution and investment teams. In Japan, hires in fixed income and derivatives management helped to further enhance the local presence and AXA IM saw strong inflows from both institutional and retail clients. AXA IM Real Assets opened a new office in Seoul to support the appetite from South Korean clients to deploy capital internationally. This is the third Asian office opened by AXA IM Real Assets and the ninth Asian office for AXA IM as a whole. We are also starting to see solid inflows in Australia for AXA IM Rosenberg Equities’ Global Smartbeta Equity strategy. In the US, AXA IM continued to invest in building its footprint both in terms of local staff and expanding its investment offering to US clients. For example, AXA IM recently signed a Participating Affiliate Agreement (PAA) allowing it to distribute strategies in the US which are managed in the UK, extending the PAA already in place for strategies managed in France. In the Nordics, AXA IM saw positive sales growth having hired a new team in early 2015.
Serving clients around the world
AXA IM takes a segmented approach in order to ensure that its products and services are as relevant as possible for clients. In the insurance segment, AXA IM saw strong demand for fixed income and alternative (real asset and structured finance) solutions. Insurance clients’ attention in 2015 was understandably taken up with preparing for Solvency II and AXA IM was at the forefront of developments around Solvency II reporting. Clients now face the challenge of implementation at a time of low yields and high volatility so it will be about selectivity and flexibility in their investment decisions.
A key growth area for AXA IM is the united linked and retail markets and 2015 witnessed the securing of key distribution deals in Italy, Germany and Switzerland, noteworthy success in the unit linked business in Benelux and the launch of retail marketing campaigns in Italy and France.
Andrea Rossi added: “As we look to continue to grow our global footprint by entering new markets and developing our retail presence it is crucial that this is supported by one strong brand. In 2015, we therefore moved to one single brand – AXA Investment Managers – and we will continue to make significant investments in marketing and communication to support our ambition. Our investments are all underpinned by our goal of becoming a truly global asset manager capable of meeting the evolving needs of our clients. This encompasses not only investments to make us a simpler, more efficient and ultimately more profitable business, but also providing innovative products and services. Our pioneering work on Solvency II reporting shows that we are more than a product manufacturer and that we understand the need to provide value added services to our clients.”
AXA IM continued to make key strategic investments in 2015 to support its progression to one global operating model. This included the completion of a IT infrastructure upgrade and the move to a shared front office tool. This investment will continue in 2016 in order to deliver best-in-class services to clients around the world. As part of this, AXA IM is also exploring the exciting opportunities offered by big data.
AXA IM’s focus on client needs is also reflected in its drive for innovation and continued efforts to evolve its product offering. In the retail space as clients continue their search for yield, AXA IM launched a number of products including Maturity 2020 a high yield fund which selects and holds corporate bonds until their fixed term in the aim to deliver a high level of return estimated at the fund launch. AXA IM also expanded its flagship short duration range with the launch of a new Asian short duration bonds strategy. On the equity side, AXA IM Framlington Equities has worked with Daiwa to launch a robotics fund for the Japanese retail market, demonstrating the ability to work together with major partners to provide creative solutions for clients.
Catering for the needs of institutional clients, AXA IM further expanded its collateralised loan obligation (CLO) range with the successful close of two more US CLOs, including its first US retention compliant CLO, and its first European retention compliant CLO. The business also saw significant inflows into its new alternative credit strategy. AXA IM Real Assets had a strong year in terms of transactions and capital raising and continued to be seen as a co-investment partner of choice working with leading international investors on the acquisition of key real estate assets such as 22 Bishopsgate in London and Tour First in Paris.
Committed to responsible investment
Since AXA IM’s first mandate incorporating environment, social and governance (ESG) criteria back in 1997, clients are paying increasing attention to responsible investing and the business has been committed to evolving its offering in order to provide clients with the level of ESG integration that best fits their specific needs and constraints. The solutions offered to clients range from ESG scoring and carbon footprint analysis to new products such as the AXA WF Planet Bonds which invests in both pure green bonds and bond issuers with a high environmental impact with the aim of ensuring sufficient diversification and liquidity(5).
Andrea Rossi said: “While our strong results in 2015 provide a solid foundation for future growth, volatile markets have presented a challenging start to 2016. In these uncertain times we remain focused on serving the needs of our clients by acting as a long-term partner across all market cycles and whatever the economic conditions. Similarly, we remain committed to our strategy of investing for growth and believe that our diversified business model, both in terms of geographies and asset classes, provides us with greater resilience, especially when market conditions are less favourable.”