One figure can obscure another. According to the most recent barometer of institutional management released by Indefi, the outsourced management market in France reached all-time highs in 2016, with EUR349bn.This sum, however, conceals a downturn compared with previous years. The average growth rate for assets outsourced to French institutionals had been 8% per year since 2012, compared with +3% in 2016. “We are reaching the end of a cycle. This is the first time that insourcing movements for management have even been larger than the outsourcing figure,” says Richard Bruyère, chairman of Indefi. Pension funds, under pressure to reduce costs, are merging, and are responsible for this slowdown. When Reunica and AG2r La Mondiale or Fédéris and La Banque Postale AM merge, they are taking the occasion to insource some expertise.This slowown is not only limited to outsourcing. It also affects the total assets managed by French institutionals. Last year, assets under management totalled EUR2.478trn, up 4%. In 2015, the growth was 5%, and average annual growth since 2011 had been 6%. However, last year, institutionals did not bring in net new money, but merely benefited from positive market effects. This market effect is beginning to drop off, as falling interest rates are no longer playing the same role as before in the revaluation of insurance assets.Indefi also notes in its study that a bipolar market is developing, in what it calls a “barbell” phenomenon. “2016 is characterised by growth in money market investments, and increasingly marked use of private and unlisted investments, including private debt.” Money markets represented nearly 5% of assets, compared with 4.2% in 2015, largely to the detriment of bonds (which retain a large majority at 75.4%).Non-publicly traded assets (real estate infrastructure, and private equity) represent 6.9% of assets.Non-liquid alternative assets are stable at 0.6%, but no more money is being allocated to it. “Alternative is dead,” says Bruyère. Hedge funds are useless in the eyes of French institutionals. They are expensive, lack transparency and do not advance the world or the economy, unlike investments in private equity, such as infrastructrure.” A word to the wise.