AXA IM

French banks are making significant strides that could reshape the European asset management landscape. The acquisition of AXA Investment Managers by BNP Paribas heralds a new era under Basel III regulations, according to Mediobanca Andrea Filtri. “The once-forbidden dream is now reality, opening new horizons for mergers and acquisitions,” he said.

Market expectations of central bank interest rate cuts in 2024 are reasonable, according to Gilles Moëc, the Axa group chief economist and Axa IM head of research, who presented Axa’s outlook for next year in Luxembourg this week. He painted a relatively rosy picture for the US and, to a lesser extent, stagnating Europe, pointing to evidence that inflation is finally under control and that political troubles are not yet certain.

Fund managers are beefing up their exchange-traded fund (ETF) ranges, to judge from a recent flurry of product launches. Luxembourg’s fund industry faces a dual threat: these ETFs launched in Ireland and are taking market share from traditional Ucits mutual funds, its core product.

Both Paris-based AXA Investment Management and Boston-based Fidelity Investments have recently launched products offering active management and research at a lower cost.

Marion Le Morhedec is global head of fixed income at AXA Investment Management. For this edition of IO’s Portfolio Update podcast she spoke with Investment Officer’s Max Severijns.

This week’s relative calm in equity and bond markets is in stark contrast with last month’s turbulence. Investors appear to have put concerns over the war in Ukraine on hold for a while. Some market experts warn however that “sentiment may be too positive”. Illiquid corporate bonds are seen as a safe haven.

The economic consequences of Russia’s invasion of Ukraine gave both equities and bonds a volatile first quarter. Nevertheless, most of the losses incurred were quickly recouped.

It is a good moment for investors to green their bond portfolios. The asset class is considered attractive after the rise in interest rates in recent months and the increased risk premiums stemming from the Ukraine war, Johann Plé, senior fund manager fixed income at AXA Investment Managers, told InvestmentOfficer. 

2020 will probably not be a great year for bonds. The low interest rates could even precipitate a shock to the financial system eventually. The outlook for equities is somewhat more promising, even though it’s difficult to grow earnings in the current low-growth environment, says Chris Iggo, CIO of AXA IM, in the second part of our 2020 outlook series.