Paris-based Natixis Investment Managers has reinforced its dedication to active portfolio management, positioning it as a central tactic amid a changing investment environment increasingly controlled by passive giants such as BlackRock and Vanguard. However, some detractors argue that the firm has overlooked the opportunities in passive investing.
Philippe Setbon, who became CEO of Natixis in December, underscored this approach during the Natixis IM Thought Leadership Summit in Paris, emphasising the organisation’s commitment to delivering high-value, conviction-driven investment services.
“Active portfolio management is back,” declared Setbon. “We have the ambition of making Natixis IM, the best, probably the best, in this new environment.”
Passive beats active
The debate about active and passive management in the investment industry has been going on for several years. Passive management is on the rise with cheaper ETF and index funds that do not require intensive management. Active funds are also not doing as well. According to Morningstar, less than half of active strategies managed to beat their passive counterparts last year.
This firm’s strategy marks a clear pivot in an industry where the dichotomy between active and passive management for many years has been a topic of debate. Natixis strongly believes that active management offers a “superior value proposition” for addressing client needs, according to Setbon.
“What is our character? Absolutely active and high-conviction driven, security driven. That’s key to our approach and we are proud of that,” he said.
Interest-rate environment ‘abnormal’
Natixis’ belief in active management also is inspired by the context of higher interest rates. “I have the conviction for more than ten years now that the environment in which we lived the last years, the last decade, was an abnormal environment,” Setbon said. “Living in a zero-interest-rate environment was abnormal.”
“Higher interest rates for longer means higher financial risk, higher volatility, and higher disparity in asset pricing,“ he said. “If we are back to normal, we face all that. Investors face all that. Active portfolio management is the best way, not the only one, for managing assets in the forthcoming decade.”
Crowded market
Critics argue that Natixis has simply missed the boat by reacting too slowly to the institutional market’s shift towards passive investing and the adoption of widespread use of ETFs. But Setbon’s comments, which also were reflected in conversations with other senior leaders during the Natixis summit, make it clear that the company is trying to differentiate itself in a crowded market by advocating an active model that offers clients a wide range of options.
Multi-manager model
Natixis operates on a multi-manager model, including asset management brands such as Mirova, DNCA, MC Credit, Loomis Sayles, Ostrum and Thematics and a global network that collectively boasts 350 analysts and 800 portfolio managers. With this structure, the firm seeks to offer a broad spectrum of highly specialised and diverse investment strategies, each developed by dedicated investment teams with distinct processes.
“I strongly believe that our multi-manager model is the best one for aligning the interests to serve client needs,” said Setbon, who has been with Natixis since 1990 and until December led Ostrum as CEO for more than four years. “Thanks to that network we have the freedom to deliver value to clients.”
Setbon’s determination shows that the firm is strategically recalibrating in response to the market dominance of industry stalwarts like Blackrock and Vanguard, especially in the passive investment sphere. This adjustment appears to reflect a more sophisticated grasp of the ongoing discussion around active versus passive investment strategies, stepping away from a simplistic binary view to concentrate on providing comprehensive value to investors.
Setbon highlighted adaptability as a key attribute in Natixis’ active management strategy. That’s evidenced by strategic acquisitions and organic growth initiatives aimed at expanding its service offerings. Examples include the acquisition of an eight-person European credit team from Kempen in the Netherlands, by Loomis, and the integration of Ostrum Asset Management, enhancing its capabilities in insurance-based and fixed-income portfolio management.
And in May 2022, Natixis completed the acquisition of major stakes in Ostrum (45%) and AEW (40%) from French postal services’ bank La Poste, which was absorbed into BPCE, Natixis’ parent company that is France’s number two banking group. Natixis now has full ownership of these two firms.
Acquisitions? ‘Why not?’
With all that completed, more acquisitions could be in the pipeline, according to Setbon. “We always have to seek ways to evolve our offering for meeting the client’s needs. There are two ways for doing that: organic growth and it can be also through acquisitions. Why not?”
Could firms active in private markets be a target? Setbon declined to be drawn on the type of firms that could be a match for Natixis.
For the year that ended in December Natixis has reported net assets under management of 1,166 billion euro, up 8 percent from a year earlier.