Asset management firms complain of bias towards French funds

Asset managers have been infuriated by the rigorous procedures for appointing fund managers to run the French state-managed pension system, complaining of a distinct French bias. French-owned firms were recently awarded eight of the 13 mandates for the first EUR 10bn tranche of the state reserve fund, the Fonds de Réserve pour les Retraites (FRR), which represents 54% of the fund by value. The FRR was launched last year by the French prime minister Jean-Pierre Raffarin with the objective of easing France's underfunded pension system.

Last year, Crédit Lyonnais and Crédit Agricole won the largest mandates, with a total value of E1.2bn, whilst the combined asset management units of the two firms also won a E1.2bn standby mandate. AXA Investment Managers was awarded E1.2bn, while BNP Paribas Asset Management won a further E1bn. The largest single mandate was won by the US firm Vanguard, although this was a passive mandate of E1.64bn. Counteracting accusations of pro-French bias, Thierry Brevet, head of investment in France for Mercer Investment Consulting, which advised the pension fund on the appointment of managers to its board, said: 'The criteria we used were typical for this kind of process. At no point was there any bias by nationality.'

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