Located a stone’s throw away from the headquarters of French financial market watchdog AMF nearby Paris stock exchange, Salamandre AM is the latest asset manager to have been granted the regulator’s agreement on 23 December 2016.
The investment firm has been co-founded by a duet formed years ago, Camille Barbier (pictured left) and Sébastien Grasset (pictured right), chairman and chief executive officer of Salamandre AM respectively.
Speaking exclusively to InvestmentEurope, the pair outlines the development plans of their new boutique.
“Sébastien and I have worked together at Twenty First Capital then at Ecofi Investissements, both of which are Paris-based asset management companies.
“I was much focused on credit at Twenty First Capital with the launch and the management of the 21 Capital Rendement Euro Plus fund from 2012 to 2014 whereas my tenure at Ecofi enabled me to oversee the management of diversified strategies and multi-management,” says Barbier.
“In 2016, Sébastien and I decided to get on board of our own boutique adventure with the setup of tailored products, relying on our experience in credit and asset allocation,” the firm’s chairman adds.
Its CEO Sébastien Grasset explains the entrepreneurial virus has led the pair to launch Salamandre AM which currently tallies €460m in assets under management mainly coming from institutional clients.
“Our assets under management, which are quite comfortable, show high recognition from institutional clients for our management. We want to fulfil the needs of French institutions such as French Tier-2 mutual and insurance firms that need to cope with strengthening regulation like Solvency II.
“In addition, we want French IFAs to have access to the best practices of institutional asset management through our credit and diversified management expertises,” he pursues.
Salamandre AM has been built around four business lines : mutual fund management (dedicated AIFs, Ucits funds available to all investors), mandate management for institutional clients and for clients of French IFAs, asset allocation advisory.
The team, currently composed of six people, owns 67.45% of the company while the remaining 32.55% are split among other investment professionals.
“We are supporting institutional clients on their asset allocations through dedicated AIFs (a fixed income fund, a diversified fund and an equity fund of funds). We have earned the confidence of our institutional clients thanks to our active hands-on management of assets and the provision of related services with a single goal: ensuring that our clients appreciate our reactivity, our risk management approach and our transparency and accountability. Salamandre AM has also strong relationships with Ecofi Investissements,” the firm’s CEO explains.
The boutique’s Ucits funds, which have or are to be launched, are/will be domiciled in France but Salamandre AM’s co-founding pair may consider a Luxembourg Sicav as an option for the future of the company.
One fund launched, two others to follow
A strategy that has already been launched is the Salamandre Euro Rendement fund formerly known as Rendement Euro Sélection.
The fund was launched in July 2015 at 360Hixance AM – with management delegated to Ecofi Investissements.
Since inception, it is co-managed by the Salamandre’s head of Fixed Income Thomas Giudici – also former portfolio manager at Ecofi Investissements – and Camille Barbier.
“The Salamandre Euro Rendement fund applies a flexible approach which combines an assessment of credit fundamentals and a top down allocation. We invest in all credit segments. The fund holds predominantly debt instruments issued in euros.
“Over 2016, the fund has had net returns of 4.99% with a reduced volatility. We have had a quite aggressive allocation at the start of 2017 with a large bucket of high yield corporate bonds but now we have come back to a more defensive positioning,” Barbier says.
The portfolio currently holds more than 90 positions. It seeks to outperform the Euro MTS 3-5y + 1% with a target volatility of 3% to 4%.
According to Grasset, portfolio diversification, active management and flexibility in the fund’s positioning (e.g. in terms of duration and maturity) remain the main drivers of the boutique’s disciplined investment process.
Subject to prior approval of AMF, a diversified fund could be launched in May 2017. It will apply a top down allocation and will target annual net returns exceeding Euro MTS 3-5y + 3%.
It will be mainly exposed to fixed income instruments and could have complementary exposures to equities up to 50% of its net asset value, convertibles up to 20% of its net asset value, commodities up to 20% of its net asset value and currencies up to 50% of its net asset value.
Says Salamandre AM’s co-founding pair, this fund could be the showcase of the manager’s asset allocation expertise.
In addition, Salamandre AM could launch another strategy during the second quarter of 2017, subject to AMF’s approval.
It will invest mainly in fixed income instruments and will have complementary exposures to equities and other asset classes.
This fund will be a “fonds de partage”, meaning that up to half of the amounts available for distribution to each share unit holder of the fund will be reversed to organisations such as charities.
“We have teamed up with two French IFAs to build a diversified ethical strategy that does apply neither SRI constraints nor ESG criteria but excludes a few sectors including, among others, tobacco, alcohol, gambling, genetics, arms,” Grasset tells InvestmentEurope.
“The fund will aim to provide returns while carrying a sharing purpose. Hence half of the net capital gains and proceeds generated by this fund will be reversed to charities and other eligible organisations. Salamandre AM will also share 10% of the fund’s fixed management fees with charities and other eligible organisations,” he adds.
Furthermore, the company offers French IFAs and institutional clients to create and manage funds while integrating specific constraints determined by them and that are compliant with the general principles and requirements of French laws and regulations.
A mixed multi-management approach
As for the multi-management approach of Salamandre AM, it sits between that of traditional mandate management and that purely quantitative and mainly passive applied by fintechs.
“On the one hand, we go beyond usual suspects funds. We could allocate up to 40% of mandates to our in-house strategies even though in practice, the limit would not exceed 30% as we are committed to an open architecture approach for the selection of funds.
“On the other hand, we can select structured products, alternative strategies such as senior loan funds as well as pure quantitative strategies and ETFs with selection tools that are close to these used by fintechs,” outlines Salamandre AM’s CEO Grasset.
Barbier says the team looks for asset managers that stand out of the crowd by their high-conviction positions and knowledge of risk management.
“We search for managers that can be quickly responsive to changes in market environment and to our requests. Last year I have visited a few French IFAs to see how they work. They were disappointed by some asset managers which were not reactive enough,” he argues.
Is SRI or ESG criteria a component of Salamandre AM’s fund selection? The manager’s chairman assesses that a number of managers are already applying an SRI approach without knowing it.
“Good managers integrate intuitively factors such as good governance and transparency in their stock/bond analysis. To not integrate them in a fund’s approach would lead to poor performances. During our due diligences of external asset managers, we ask them if they conduct any SRI review of the companies they select in their funds.
“Have these firms a sustainable future in line with tomorrow’s world expectations? Do they treat their employees well? These questions need to be answered,” says Barbier.
Speaking of green investments, green bonds are an asset class to monitor for Salamandre AM’s duet. Grasset stresses that it sparks interest among institutional clients.
“As the French law on energy transition requires from local institutional investors to disclose their carbon footprint, we could expect an appetite from them for this asset class even if green bonds universe is still low yielding.
“For the moment, we continue to analyse this asset class as the number of issuers and transactions is substantially increasing and the expansion of green bond structures will likely continue this year,” Grasset concludes.