Specialists Dominate French Long-Only Alpha Table

Stephen Harris

2 April 2007

EDHEC and EuroPerformance have released their 2007 rankings of the top French asset management companies for long-only equity funds: the Alpha League Table. The rankings show considerable stability in the production of alpha, with 17 of the 25 ranked companies appearing for the second time. This confirms that the alpha being produced is the result of a management process that is more to do with the talent of the asset managers than with the configuration of the markets, according to EDHEC. The top spot goes to a non-specialist, ODDO Asset Management, with second place taken by HSBC Private Bank France. The third position goes to wealth manager, Martin Maurel Gestion. Alpha remains the domain of the specialists, even in the major French networks, where it is the specialist subsidiaries that reveal the greatest capacity to generate alpha, according to the listing. Most of the top ten places are awarded to independent companies. For the whole of the equities market, the proportion of funds that deliver significant alpha is around 30 per cent. This measure provides investors with the probability that a fund will deliver a performance that is superior to the remuneration that might normally be expected from the risks to which the portfolio is exposed. The French equities class tops the table with almost 24 per cent of funds generating alpha. This is followed by international equities (21 per cent), European equities (13 per cent) and North American Equities (9 per cent). In comparison to the previous Alpha League Table, these figures represent a drop-off in the French Equities class (24 per cent as against 46 per cent in 2006) and a concordant and significant rise in international and European investment.