Orcadia Asset Management, active in the Benelux and France, has surpassed the 1.1 billion euro mark in assets under management. This allows the asset manager to operate profitably from Luxembourg. “Mergers and acquisitions in the Belgian landscape only make sense if there is a cultural match.”
So says co-founder and chairman of the board Etienne de Callataÿ (photo) in an interview with InvestmentOfficer.be. Assets under management are higher than at the beginning of the year, above 1.1 billion euro, and he said this is due to the good performance of the Luxembourg-based Sicav funds.
“We have expanded our presence with institutional clients. We are well known to well-known life insurers such as Athora, OneLife, Vitis Life and Lombard International Assurance. We also work with some smaller intermediaries, such as Funds for Good. We are extremely satisfied from these collaborations,” said De Callataÿ.
MNA ‘no holy grail’
Degroof Petercam CEO Hugo Lasat recently told Investment Officer that mergers and acquisitions will increase substantially in the Belgian landscape. Orcadia’s co-founder shares that view.
“There are indeed economies of scale to be gained. And that encourages consolidation. Look at Mercier Vanderlinden, which is being integrated into Van Lanschot Kempen. But mergers and acquisitions are no holy grail. The cultural match, the spirit and the entrepreneurial spirit must also be there. We can operate profitably with 1.1 billion.”
“We give a large part of our profits back to the employees and on top of that we also donate 10 per cent of our profits to charity, more specifically to the Orcadia fund which was set up at the King Baudouin Foundation to support academic research on the link between environment and health. Takeovers will happen but the success of Orcadia shows that it is perfectly possible to be very profitable on a stand-alone basis.”
Orcadia leaves a lot of freedom to its employees, who do not work within a hierarchical structure and so are also willing to go the “extra mile”. “People have no problem working evenings or weekends, but with us they are given every opportunity to develop. Since its establishment six years ago, only one person has left us. People who are customers with us are very happy to have a permanent contact person. With the big banks, unfortunately, this is sometimes different,” said De Callataÿ.
‘Consistent outperformance’
It has been a difficult year for everyone, not least for balanced managers. “But we are relatively satisfied with our performance. We are outperforming other established players in Europe by 1-2 percentage points in relative terms. And that is not a lucky shot, because we have been consistently outperforming several well-known private banks in Belgium for years now. Consistent outperformance is very important for us. At the same time, we have to remain modest. We have not escaped the sharp decline in the markets this year, even if losses are slightly more limited than competitors. In the summer, we bought put options, and that did not hurt us and gave us 1 percentage point.”
Still, De Callataÿ wishes to remain discreet. It means that he and his partners look to manage the company in a lean and mean way, watching the little things. Major marketing and advertising campaigns are not to be expected. “I still see a lot of growth potential in Belgian pension funds. With a size of more than 1 billion, we have achieved the necessary critical mass for that. We do have some universities, congregations and the like as clients, but in this segment we can certainly still expand. I am sure our sustainable management philosophy will definitely appeal.”
De Callataÿ said that Orcadia was established with a clean slate, and has no problem documenting clients to comply with regulations. “After all, we started in a world where MifId already existed. With us, there is no legacy of portfolios and clients not being well documented.”
Asset allocation portfolios
Asset allocation is Orcadia Asset Management’s great strength, according to De Callataÿ, with experienced people such as Günter van Rossem and Eric Lobet, both formerly with Bank Degroof before its merger with Petercam. Portfolios are predominantly filled with passive funds and ETFs.
“At some point, passive management will become so dominant that there will be inefficiencies to exploit in the markets, but we are not there yet. Besides, in today’s world, it is best to invest in the big established players, who have pricing power, rather than smallcaps. I believe in the story that smallcaps bring an additional risk premium, but right now we prefer largecaps. Our sustainability bias is also overweight in blue chips, because smallcaps often do not have the same ability to become more sustainable or meet the requirements of external sustainability agencies.”
This article originally appeared in Dutch on InvestmentOfficer.be.