Although 2022 was not a good year for the markets, it was for Luxembourg asset managers. Three of them were included in this year's list of the best European managers. They are Bluebay Funds, Candriam and Schroder.
Last year, only one representative of the Luxembourg market was recognised at European level: Flossbach Von Storch. To be considered based in a particular country, a promoter must have the majority of its range registered in that jurisdiction. And to be distinguished, its range must show good performance over time: 4 years in this case.
The year was “chaotic” for the markets, commented Chauvet. “Mainly because of the war in Ukraine. After a very early part of the year when we saw highs on almost all markets, we stalled around mid-January when investors considered that the situation in Ukraine was becoming serious and that war was inevitable. From then on, the market plunged sharply. Despite a rebound before the summer, and then a second one in the last quarter, the markets were only able to erase some of their losses.”
Of the 231 categories in the APT ranking on which the European Funds Trophy is based, only 19 were able to post positive performances. Most of them were very modest.
It was mainly commodities--gold, precious metals, oil and food--that benefited from the situation. “This is very representative of what we might call a ‘war economy’. Managers active in these themes have benefited from the rise in prices following the war,” observed Chauvet.
For all the other strategies and managers, the war combined with inflation--“a second-round effect”--meant that there was no shelter, no possibility of switching to a classic category with a conservative profile. This is a likely reason for the withdrawal of $278bn from the European investment fund industry in 2022 as noted by the trade group Efama, the highest level of capital outflow since 2008. The European fund industry attracted €888bn in 2021.
The war has also made life difficult for ESG managers. While since 2020, sustainability practitioners have benefited from the acceleration in demand caused by the covid crisis--even to the point of creating a bias, with companies with good ESG ratings attracting more capital than others--2022 has been a year in which it has been impossible to find a ‘good-for-you’ asset class that can help them escape the rout.
Limits of index funds
Although the markets were very volatile, the winners of the 17th edition of the European Funds Trophy were surprisingly stable. Chauvet admitted that this stability can make reading the prize lists “monotonous”. But it shows that, whatever the market conditions--“and last year, they were not exactly classic”--“there are managers who are very good and very resilient at the best level”. The methodology allows these managers to be distinguished.
“Year after year, the indices are far from being the best in class,” noted Chauvet. “Those who advocate index management make a sacrifice in performance from the outset. And sometimes a big sacrifice. Index management is good in practice when you can’t do anything better. It can be a way of positioning oneself while waiting for what comes next. But very clearly, for the end client, the question of regular, long-term performance must be asked.”
And looking ahead? 2023 looks less chaotic.
“Overall, over 13 months--from mid-January 2022 to mid-February 2023--the market has made up its losses.” And the market has recovered to levels that were among the all-time highs on most markets before the crisis. “We are now at cruising speed, where what is going to matter is not so much the war as inflation.” That is a risk that is somewhat better managed than geopolitical risk.
The complete list of winners of the 17th edition will be published on Thursday at 9pm here.
Read the original French version of this article on the Paperjam site.