The challenges currently facing the asset-management sector are numerous and significant. Only those companies able to offer their clients the best products and service will grow. So says Tommaso Corcos, chief executive officer of Eurizon Capital, the asset-management arm of Intesa Sanpaolo.
With around €267bn of assets under management (AUM) and a 14.8 per cent share of the Italian sector at the end of 2015, Eurizon Capital is one of Italy’s largest asset managers – a source of pride for Corcos but never complacency.
“We have done very well in a difficult period, and a very competitive sector, because of the top-quality performance of our products and our ability to innovate and read market trends, so we aim always to offer the right investment solutions, with the right risk profile, at the right time.”
Such skill, says Corcos, must be accompanied by an unwavering commitment to customer service and relationships.
“We believe absolutely in the importance of supporting our clients, particularly in the moments when things are not going so well. That is where you make the difference.”
One of the qualities he believes to be most prized by Eurizon Capital’s clients – both institutional and retail investors – is transparency.
“We are managing the savings of around 25 per cent of the Italian public. We understand their sacrifices and hard work, the future they have tied up in these savings, so we are fully aware of the need to be transparent, ethical and correct.”
With an ever-expanding horizon of investment markets, clear core values are more crucial than ever. “On the international front our clients are mostly institutional investors, so stewardship – trying to improve corporate governance in the companies in which we invest – is key.” The firm has a dedicated stewardship department dealing with companies in which it invests.
An investment world in which the traditional “cushion” of fixed-income investments is no longer reliable calls for new ideas, says Corcos. “In the past, bonds were a machine for producing revenue and also a means of diversifying the portfolio to soften the effect when stocks were not going well.”
Now, he says, with the fixed-income yield “practically at zero”, new avenues of diversification are required.
One solution, he suggests, is to look further afield. In 2007 Eurizon Capital acquired a 49 per cent share in Penghua Fund Management. The Chinese company has since seen its AUM increased by 471 per cent at the end of 2015.
“Initially the acquisition allowed us two ears, two eyes and two legs in China. In the last few years those antennae have also allowed us to develop a significant level of business with impressive numbers,” says Corcos.
China poses a series of challenges, but there are also strong analogies with what we have experienced in the international markets in recent years.
“In China, too, we are talking about excess debt, the contraction of interests in the fixed-income world, the necessity for savers to diversify.”
Establishing effective relationships has been particularly important. “We placed a lot of trust in the local management. There are cultures which are easier to break into, from the point of view of shared experience. Others, like China, are further away.”
Yet this apparent distance can also bring synergy. “As long as there is a shared way of seeing the world, then the cultural differences when two companies come together can bring great results,” says Corcos. An awareness of the need for continuous innovation – “to look beyond our story so far” – has led to the establishment of a Hong Kong subsidiary.
In addition to Asia, Eurizon Capital is putting efforts into developing a strong presence in Europe. The creation of a branch in Paris is under way alongside the Eastern European HUB (comprising VUB AM in Slovakia, CIB IFM in Hungary and PBZ Invest in Croatia) controlled by the Luxembourg-based Eurizon Capital S.A.. Last but not least, in 2015 Eurizon Capital SGR entered the UK market through a strategic partnership agreement with SLJ Macro Partners LLP, a business operating in macroeconomic research, in currencies and advice on investments and portfolio management.
Whether in Asia or Europe, Eurizon Capital exhibits a number of characteristics which Corcos believes to be distinctly Italian.
We know about problem solving. As a nation which has faced difficulties, we are used to looking for paths around obstacles. We are adaptable.
This, he says, means always looking to the long term. Eurizon Capital adheres to the Principles for Responsible Investment of the United Nations and is committed to “walking the talk” on the subject of ethical and sustainable investment.
Eurizon Capital was the first Italian asset manager to offer ethical funds in 1996. Over time, these behavior guidelines have become an integral part of the SGR’s investment process. Complying with sustainability criteria requires a modus operandi that is shared by the whole company. “We are working to increase the awareness of all our colleagues of the effects that our wastes could have on environment.”
A recent study from the Morgan Stanley Institute for Sustainable Investing found that over the past seven years sustainable funds had matched, and often outperformed, comparable traditional funds. It is an assessment with which Corcos is in full agreement.
“I am fundamentally convinced that this is the right direction for the financial world, as well as the planet. It is positive for the companies involved and for the growth rate of [individual] countries,” he says. “It means everyone round the table can come out as a winner.”
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