The specific nature of US and UK markets
Distributing French funds in the United States can be a real headache. For that, a foreign company must obtain a prior PAA (participating affiliate arrangement), a challenging set of requirements laid down by the SEC (Securities and Exchange Commission). “Like other companies, we are looking at it very seriously, admits Joseph Pinto, Head of Marketing and Investment Strategy at Axa IM. But the costs are high and the market is very competitive. Consequently, we are considering registering our best products in the US, in order to achieve the best possible return on our investment.”
However, the results are worth it according to Natixis, which gained a foothold on the US market via the acquisition of Nvest in 2001: “For NGAM, it is four times more profitable than the European market, mainly because the retail share is bigger there. Therefore, even if the operating ratio is not as good, margins are better”, explains Pierre Servant, its CEO (chief executive officer).
In the United Kingdom, the situation is also very specific. First of all, the institutional market is made by consultants who are involved in more than 80% of transactions (30% in France), while the retail market is split between, on the one hand, IFAs (independent financial advisors) who are responsible for 50% of assets and, on the other hand, bank networks. The former are very attached to UK funds (OEIC), but that is not necessarily the case of bank networks. Therefore business development in Great Britain requires a twofold strategy: local funds and cross-border funds (Luxembourg or Dublin).