Risk rather than performance


Founded in 1784, French boutique Cholet Dupont was historically a broker. Managing over €2bn in assets, the group has split its activity in three departments : private wealth management, asset management and multimanagement.

Maxime Sapin (pictured), portfolio manager and head of Multi Management at Cholet Dupont, says the firm has been more involved in multimanagement in recent years. “The good performance we have recorded on the fixed income segment in the last years has led us to open clients’ portfolios to open-ended architecture products,” he adds.

Cholet Dupont runs a list of authorised funds, all actively managed. Only best-in-class funds are selected for each asset class. However, Sapin says the firm has subcontracted part of its work on fund selection owing to the large amount of products available on the market. The firm is therefore backed by an external adviser.

“Our managers are free to pick one or not. They can choose an absolute return fund or keep their short term fixed income fund. There are no rules as we are not following a model,” Sapin underlines.


Both quantitative and qualitative analysis are used along the process, relying on Morningstar’s investment universe. Once the research sharpened, Cholet Dupont selects funds offering best risk-return ratios.

“We insist on the risk rather than the performance. For instance, we focus on drawdowns because it appears at a pertinent factor to us. The performance and the volatility of a fund do not show what we can really expect from a fund.

“We focus on risk because it fits the needs of our clients. Our clients are families who want to preserve their capital and passing it on to the next generation. They show no interest in highly speculative products,” Sapin argues.

He explains that Cholet Dupont keeps a long term position in funds the firm is invested in.

“As private wealth managers, the taxation of our clients is directly impacting our turnover in our fund selection. Consequently, a fund’s performance that would show a two points spread does not justify an arbitrage,” Sapin also emphasises.

Cholet Dupont’s head of Multi Management says selection excludes hedge funds and comprises Ucits-compliant funds only. Among other criteria impacting the fund selection, Sapin highlights products with longer track records and the size of the funds.

“Our criteria are not excluding funds definitely but we tend to avoid funds managing under €50m in assets,” Sapin says.

Sapin adds that he meets two or three local asset managers per week. Cholet Dupont requires a “quick and transparent answer” from them.

“We face difficulties to reach asset managers whose headquarters are abroad as we are maybe not entering into their scope because of our size. As a result, we sometimes contact them,” he explains.


Due to the current low rate environment, Sapin stresses demand for absolute return strategies and thinks it is set to increase. He points out that Cholet Dupont might enlarge its range of absolute return funds in its buy-list.

As for alternatives, Sapin says requests are not coming from clients but it might come from managers. “We would choose alternative funds whose practices remain simple to understand for us and our clients such as global macro or long short,” he adds.

Depicting the French asset management market, he feels that there is “no new money” coming into it.

“All of it is retained in mandates being lost by one asset manager and gained by another,” he concludes.

As a main challenge, Sapin foresees tougher regulation on the transparency side over the coming years.

Maxime Sapin has been working for Cholet Dupont since July 2008. Prior to joining the boutique, he worked at Societe Generale Asset Management as head of Performance Analysis and GIPS Compliance before being appointed portfolio manager in April 2005.

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