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Ossiam ETFs hit by “significant” capital outflows over the past six months
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Ossiam, a subsidiary of Natixis Investment Managers, has been hit by “significant” capital outflows from its exchange-traded funds in recent months.
Ossiam ETFs have seen consecutive monthly net outflows totaling €1.4 billion over the past six months, representing more than 19 percent of its ETF assets, according to Morningstar data.
The company, which manages Natixis IM’s range of European ETFs, as well as certain mutual funds, saw its ETF assets under management increase from €7.5 billion to €6.7 billion over this period.
These capital outflows come as the European ETF industry as a whole attracted €67.4 billion in inflows over the last five months to the end of April.
This article was previously published by Set Europe on firea title belonging to the FT group.
An Ossiam spokesperson said the trend among its clients was “a transition of some of their [environmental, social and governance] investments towards more passive approaches”.
“At a corporate level, our assets under management have remained largely stable year-to-date, with net inflows into bespoke solutions and some outflows into ETFs,” the spokesperson added.
Natixis IM as a whole recorded €1.3 billion in net inflows on its long-term European funds, including Ossiam, as well as €4.1 billion in inflows on money market products, according to Morningstar data for the last five months .
Ossiam’s “significant capital outflows” come despite a “steady increase” in the firm’s assets over the past decade, according to Monika Calay, director of UK manager research at Morningstar.
“This year’s steady capital outflows suggest that investors are rethinking their commitment to Ossiam, questioning whether the costs justify the returns,” she says.
Morningstar “disputes” Ossiam’s annual fees, which are “high for their passive range” at an average of more than 40 basis points, Calay added.
At the same time, the company’s 36 percent funds clearance rate across all of its products was “substantial,” she said.
Ossiam recently closed some niche funds, reflecting the challenges of maintaining interest in specialty products, Calay said.
“The future remains uncertain for many of Ossiam’s offerings,” she said, noting that 11 of its funds have assets of less than €100 million.
Many funds in the Ossiam line were smart beta, or strategic beta, strategies, and the market share of these funds has declined in recent years, currently sitting at 5.6 percent, Calay noted.
“Investor behavior has been largely influenced by the search for performance,” favoring in particular the “seven magnificent American technology stocks,” she declared.
“This trend has prompted a move away from strategic beta ETFs in favor of market cap-focused investments.”
Detlef Glow, head of Europe, Middle East and Africa research at LSEG Lipper, said the manager had mainly institutional clients and so its capital outflows could be the result of an asset allocation decision. one or a small number of investors.
Glow said the main driver of Ossiam’s outflows in April was a US-focused value ETF, which could be because value has underperformed growth “for a long period of time” .
Ossiam’s exits come as some smaller ETF providers have been bought by larger firms, including Ark’s acquisition of Riced and Janus Henderson buying Painting.
It was reported in January that Natixis IM’s parent company, BPCE, had approach several European asset managers regarding a possible merger with its fund arm.
*Ignites Europe is a news service published by FT Specialist aimed at professionals working in the asset management sector. Trials and subscriptions are available at igniteseurope.com.