Ossiam ETFs hit by ‘significant’ outflows over past six months

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Natixis Investment Managers affiliate Ossiam has been hit by “significant” outflows from its exchange traded funds over recent months.

Ossiam ETFs posted consecutive monthly net outflows totalling €1.4bn over the past six months, amounting to more than 19 per cent of its ETF assets, Morningstar data shows.

The company, which manages Natixis IM’s European ETF range, as well as some mutual funds, has seen its ETF assets under management drop from €7.5bn to €6.7bn over this period.

The outflows come despite Europe’s ETF industry as a whole attracting €67.4bn of inflows over the past five months to the end of April.

This article was previously published by Ignites Europe, a title owned by the FT Group.

An Ossiam spokesperson said the trend among its clients was “a transition of some of their [environmental, social and governance] investments to more passive approaches”.

“At the firm level, our AUM has been largely stable since the start of the year, with net inflows in bespoke solutions and some outflows in ETFs,” the spokesperson added.

Natixis IM as a whole has had €1.3bn of net inflows into its European long-term funds, including Ossiam, as well as inflows of €4.1bn into money market products, Morningstar data for the past five months shows.

Ossiam’s “significant outflows” come despite a “steady rise” in assets over the past 10 years at the company, according to Monika Calay, director of UK manager research at Morningstar.

“This year’s consistent outflows suggest investors are rethinking their commitment to Ossiam, questioning whether the costs justify the returns,” she says.

Morningstar “takes issue” with Ossiam’s annual fees, which are “steep for their passive range” at an average of more than 40 basis points, Calay added.

Meanwhile the firm’s 36 per cent fund liquidation rate across its products was “substantial”, she said.

Ossiam had recently closed some niche funds, which reflected the challenges of sustaining interest in specialised products, Calay said.

“The future remains uncertain for many of Ossiam’s offerings,” she said, noting that 11 of its funds have assets below €100mn.

Many funds in the Ossiam range were smart beta, or strategic beta, strategies and the market share of such funds had declined in recent years, currently standing at 5.6 per cent, Calay noted.

“Investor behaviour has largely been influenced by performance chasing”, particularly favouring the so-called “magnificent seven US technology stocks”, she said.

“This trend has prompted a shift away from strategic beta ETFs towards market-cap focused investments.”

Detlef Glow, head of Europe, the Middle East and Africa research at LSEG Lipper, said the manager mainly had institutional clients, so its outflows might be the result of an asset allocation decision of 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 may be because value has been underperforming growth “for a long period”.

Ossiam’s outflows come as some smaller ETF providers have been bought by larger firms, including Ark’s acquisition of Rize and Janus Henderson buying Tabula.

It was reported in January that Natixis IM’s parent company, BPCE, had approached several European asset managers over a potential merger with its fund arm.

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.