Changing direction

Special report: France


Denis Cohen Bengio, Paris-based head of retail product management at Axa Investment Managers, is in a confident mood. “I think we are ready to target all sorts of clients,” he says. In the past, his department has dealt primarily with retail clients through the Axa group. Although this has given the company some exposure in the mass market, Bengio admits that Axa networks tend to sell to relatively wealthy clients on the boundary between retail and high-net-worth individuals.

“What we are doing now is segmenting our product offering according to the type of client,” he says. But he is not trying to take on the big players in the French retail market. Instead, Axa Investment Managers is pitting itself against asset managers such as Fidelity, Schroders, UBS and Credit Suisse.

Bengio joined the company in 1998 as a relationship manager, and has been involved with its structured products offerings from their inception in 1999. France is still the core market, but the company’s presence across Europe is growing. “We already sell in Spain and Belgium. Italy is growing and Germany is starting to look promising,” he says.

Brand identity

This rapid growth in Europe is being helped by the company’s association with insurance giant Axa. “You have to make a difference between Axa IM and Axa Insurance. We are an independent company and we distribute our products just like any other investment manager. Having said that, the Axa group is a very important customer,” he says. Bengio wants to see Axa IM recognised as a provider of financial protection, but concedes that most people associate the name with insurance. “Being associated with a global brand has its advantages. It’s good to have an established name, even if it’s not exactly in line with what you do,” he says.

Axa is currently distributing the fourth tranche of a product called Performance Confort. This is an eight-year product in a life insurance wrapper, based on a portfolio of managed funds. Launched in September 2002, it uses constant proportion portfolio insurance (CPPI) and pays out 75% of the highest net asset value of the underlying funds over the course of the investment.

The tranches have been successful, says Bengio, with each one selling more than the last. Axa raised €100 million from the first, €120 million from the second and €150 million from the third. The fourth tranche has raised €70 million so far, with three months to go until it closes.

Using CPPI

The use of CPPI puts the product into a different market compared to the vanilla-type offerings of mass-market distributors such as La Poste. “CPPI is an asset manager’s product. You have to be an asset manager to reap the benefits of the technique, such as flexibility and transparency,” he says.

Axa IM has used CPPI for a variety of products. It recently launched a five-year product based on listed European real-estate funds, including the EPRA tracker index fund that Axa IM launched late last year. This comes off the back of an institutional deal which the company did on real estate using CPPI.

Another interesting product launched recently is the Patrimoine Obligation Croissance. This is sold to high-net-worth individuals and is based on an actively managed portfolio of credit default swaps. Axa sells protection on the names in the portfolio, between 100 and 150, and earns a premium, aiming to pay out Euribor plus 150 basis points. The product uses CPPI to guarantee the capital.

Bengio launched the product because he sees a lack of credit exposure in the market. Even though the product only went on sale at the start of March this year, Bengio believes it will be a success and is already working on a second tranche.

Looking ahead, the Axa IM wants to sell more products using CPPI based on single funds, which have been successful in Belgium.

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