2021 was a good year for Paris-headquartered fund manager and ETF issuer Ossiam as its assets rose by USD1.8 billion on the back of, among other things, providing ESG solutions to institutional managers.
The firm, which now has USD6.6 billion under management, was founded in 2009 post the global financial crisis and the Madoff scandal, with the founding partners very much focused on providing an alternative to what was at the time the traditional asset management approach.
Aous Labbane, head of business development at the firm, says: “Our founders set goals of full transparency and liquidity and using ETFs was the easiest way to reach those goals. We also developed by having a strong quantitative research approach to investment management, which opened doors to external partnerships in the academic world.”
The result was the first minimum variance ETF in Europe and the Shiller Barclays CAPE Sector Value ETF which dominates Ossiam’s assets with USD3.3 billion in a systematic sector rotation approach tilted toward value, based on Professor Robert Shiller’s research.
Ossiam is an affiliate of Natixis Investment Managers who invested in the company in 2010. Some 85 per cent of the assets are in ETFs, while the rest is in open-ended funds for institutional investors.
Etienne Vincent, Head of Quant Strategy explains that the 2021 asset increase derives half from the market effect, as the firm specialises in US equities, and the rest comes from institutional mandates looking for a customised solution to incorporating ESG into their investments.
Labbane explains that the firm has global plans for its biodiversity product in the food sector, an SFDR 9 fund. “It’s a worldwide ETF for biodiversity but based on a metric which is way beyond the examples we see in thematic funds. We try to use innovation to differentiate ourselves and the goal of this product is to reduce the negative impact of the investment universe on biodiversity.”
Vincent says that the firm’s original focus on smart beta has evolved into one where its main strategies are values based at a sector level. “In the context of sustainability, it regains some meaning,” Vincent says. “It is about exposures not just stories and narratives about side events.”
Ossiam is undertaking a transfer of certain passive funds into Paris-aligned ETFs.
As a French manager, Ossiam has a large investment base from France and the French speaking countries, such as Belux, Francophone Switzerland and Monaco, but the remaining investor based is diversified around Europe and even into Latin America.
“The appetite for ETFs in France has been high usually in very specific products,” Labbane says. “We struggle with the IFA market here as it is still driven by commissions as RDR has not happened in France. There are some platforms that can trade with efficient levels but some IFAs still choose portfolios that pay commissions.”
However, the recent low interest rate environment has made the consumer more aware of high fees, which can be as much as 2 per cent on a commission-led investment portfolio.
“That 2 per cent makes a huge difference – low interest rates have pushed all the investors to be more careful on commissions and France is a market that will go through a reduction in costs,” Labbane says.
Having a quantitative approach makes customising data around ESG considerably simpler, Labbane says. “It is easier for us to take all the data and customise it rather than having large team of analysts analysing each company. Some don’t like the quant side, but others say that if you want a good evolution, then this is a better route.”