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EFAMA – November 2013 Investment management forum

EFAMA – November 2013 Investment management forum. Introduction by Christian Dargnat, President EFAMA. A new world is on its way . Global AuM reached €43 trillions. Breakdown of financial assets. Global AUM dynamic. McKinsey & Company - 2013. Active core assets continue to lose share .

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EFAMA – November 2013 Investment management forum

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  1. EFAMA – November 2013Investment management forum Introductionby Christian Dargnat, President EFAMA

  2. A new world is on its way ...

  3. Global AuM reached €43 trillions Breakdown of financial assets Global AUM dynamic McKinsey & Company - 2013

  4. Active core assets continue to lose share Product segmentation Harvesting rewards • Investors have grown frustrated and disillusioned with the performance of traditional assets • Investors’ historical focus on maximizing risk adjusted returns was undermined by the market volatility during the crisis • Investors expect to pay for real value added or invest in low cost beta solutions 5% 8% 10% 22% 23% 24% 3% 4% 2% 66% 59% 50% 13% 5% 7% BCG - 2013

  5. Significant evolutions ...

  6. ... On the profit pool Europe Escalating costs Average AuM Profit pool • Profits remain well below pre-crisis highs, as costs hit record levels • Regulation is a factor but sales and marketing costs now make up almost one quarter of AM’s costs • Cost pressures will require greater discipline about where to invest and require asset managers to invest effectively Revenue pool Costing pool McKinsey & Company - 2013

  7. ... On the perception about AM Shadow banking Systemic risk • The EC identified three priorities on which they intend to take further initiatives: • Money Market Funds • Securities financing transactions (securities lending and repo) • Collateral management • Focus should be placed on potential regulatory arbitrage and the lack of a level playing field • Regulators define shadow banking as a system of entities which carries one of the following activities: • Perform maturity transformation • Perform liquidity transformation • Allow credit risk transfer • Use direct or indirect leverage • In spite of an unprecedented wave of regulation with more than 30 initiatives McKinsey & Company - 2013

  8. … On the majors threats of AM industry Overregulation Lack of a level playing field Bankers • UCITS 1 • UCITS 2 • UCITS 3 • UCITS 4 • UCITS 5 • UCITS 6 • 2013 • 1985 • 2011 • 2014-15 • 2002 • Never • Implemented + Asset Managers + Insurers = PRIPS McKinsey & Company - 2013

  9. Opportunities to take up!

  10. 1 - Have a strong united voice across the industry 27 national member associations 60 international corporate members 23 associate members 14 trillon in AuM

  11. 2 - Offer viable solutions to the issue of long term investment Protection Education • Investor education was, is and will be key to protecting the reputation of our industry • Synthetic documents to present our industry to the next Members of Parliament • Develop a proactive approach to communication via social media • Develop a dedicated website • Set up road shows in European Universities • It is in our best interest to safeguard our clients • Without investor trust, we cannot hope to attract savings and increase assets under management. • Without investor trust, we cannot hope to convince regulators and politicians to support our industry. • To pave the way for sustainable growth McKinsey & Company - 2013

  12. 3 – Financing the economy is the Asset Management Industry’s added value Our mission: TO BE RECOGNIZED AS THE LONG TERM INVESTOR Our mission: TO BE RECOGNISED AS THE LONG TERM INVESTOR SME Large firms Corporates Corporates AM Policy makers European Citizen Risk aversion Lack of confidence Financing gap Retirement European citizens

  13. 4 - Offer viable solutions to the issue of long term investment DC segment is outperfoming A new landscape … … in market expectations Occupational plans Individual plans Public pension 2 3 1 … In the range of investments Liquidity Loans SME equities Securitization Infrastructure Maturity How canwepretend to be LT investors if wedon’ttakeintoaccount the challenges that the world is facing ? McKinsey & Company - 2013

  14. “Only transition is eternal” A strong and credible voice at EU level Without investor trust, we cannot hope to attract their savings New needs and opportunities for institutions and market based intermediation To allocate channel savings into long term investments will benefit our clients Asound and balanced supervision and regulation is welcome by the AM industry 1 2 3 4 5

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