Major inflows now come from individual investors, says Eurizon CEO

As sovereign wealth funds reduce their market exposure, a comprehensive customer experience becomes vital, says Tommaso Corcos

March 10, 2016

Markets have been up and down off the back of weak commodity prices and uncertainty. What is the best strategy for investors to weather the storm? Tommaso Corcos, CEO and GM of Eurizon Capital, discusses.

World Finance: Markets have been up and down off the back of weak commodity prices and uncertainty. Here to discuss what’s been happening in Europe is Tommaso Corcos, CEO and GM of Eurizon Capital. Well Tommaso, let’s start with European economies, now they were off to a rocky start for 2016. So what would you say is the investor sentiment on the ground today?

Tommaso Corcos: Well the investors’ sentiment is very conservative at this moment. Not too much given that a lot is already happening in terms of correction, but certainly the speed of the correction of the market, I think that took everyone by surprise in terms of the entity of the correction.

So now a lot of people are really questioning, or which is really a half of the economy, so probably many investors are waiting to be reassured in terms of the capability of certain engines to give support to the world economy.

So, I think that there is a lot of interest in the price of a lot of shares that are reaching interesting targets, but notwithstanding that, there’s still investors that are moving very cautiously, just for the reason that I mentioned.

World Finance: So this sort of investor sentiment, what kind of impact has this had on the asset management industries?

Tommaso Corcos: Starting from the last quarter of the past year and also in the first few months of 2016, we face a slow-down of inflows. But this is pretty normal, I mean you just read every day in the newspapers that the stock markets are going down, that you see a lot of volatility. And so I think that there is a feeling of being more conservative.

So if you have too much invested on the equities, you scale down your risk. Or if you want to invest you take more time to do it and so you wait for better times. I think this is pretty understandable and this is the reason why companies like us must support our distributors in giving the right advice to the savers.

World Finance: Well your company has certainly been bucking the trend with success after success. So what’s been your strategy?

Tommaso Corcos: The strategy is to combine, not only the importance of the performance of the product, but also the capability of giving the right advice, giving the right service to the customer. And this is our mantra, it’s something that we strongly believe, this double combination that is not only performance driven but service driven. Because in the past years the major inflows came from individual investors and not from institutional ones.

Because if you think about what’s happening to the sovereign wealth funds, they really reduced their investment on financial markets. So just being more focused on individual investors means that you must be capable of giving them a lot of service, because they’re not sophisticated like institutional ones.

World Finance: And your principles for responsible investment, talk me through those?

Tommaso Corcos: This is very important. You try to promote the best practice in corporate governance, respecting the environment and taking social responsibility. It’s a win-win situation, because it’s a positive for the final investor that you represent. It is positive for the companies in which you invest, because it’s pretty proven that the companies who practise in terms of corporate governance, have the better performance related to others who do not care for this principle.

Also, it’s very good and positive for the capital in the markets in general, just because a more sophisticated market where all the companies practise this principle is able to lure more investment from institutional investors. And this is very positive, that is why it’s a win-win situation.

World Finance: Now with so much uncertainty in today’s climate, how do you approach risk management?

Tommaso Corcos: In the past few months we scaled down on the risk, waiting for better times and more clarification, first on the economic scenario and second on the profit environment in which we are now. When the market will discount is a factor, we will again raise the level of risk and the fund manager will again increase their position. So risk management in moments like this are important to reduce the volatility of the product performance.

World Finance: So bearing this in mind, what investment trends are you looking towards in the coming 12 months?

Tommaso Corcos: We are still focusing our attention, and the attention of our investors, to move the asset product. What I mean by multi-asset product is an investment solution, an outcome oriented product, giving the possibility to the single customer to enter in a well-diversified solution. So with a single investment they can access the equity market or the bond market.

I think that in an environment like this, where the volatility is still very strong, it must be really clear for the investor what type of product he’s buying, what type of volatility he’s bearing and what type of targets he’s trying to pursue. So that the combination of all these situations can give a product that really feeds the needs of this customer.