AXA SA plans to create a 137 billion-euro ($156 billion) asset-management unit to cater to the growing demand for real estate and other alternative assets.
The French insurer will divide its asset-management business in two units: alternatives under Isabelle Scemama and a 536 billion-euro “core” division arm led by Hans Stoter, according to a statement on Tuesday. The changes should take effect in the second quarter of this year.
Institutional investors are pushing into assets such as real estate and private debt as bond yields hover close to record lows. Global assets under management reached $10.3 trillion last year, up from $3.1 trillion in 2008, according to research firm Preqin.
There is a lot of opportunity in “private markets, which means markets where access to information is even more critical,” Scemama said in a telephone interview. AXA is one of the world’s top 10 investors in the alternative sectors and the new division will capitalize on that experience, she said.
Pension funds and insurers increasingly rely on these assets to generate the yield they need to meet liabilities. For asset managers, these investments offer better insulation against the fee pressure exerted by low-cost index-tracking funds.
AXA’s new alternatives unit will bring together its real-assets arm, structured-finance platform and its Chorus hedge-fund business, according to the statement.
“We strongly believe in leveraging both traditional and alternative asset classes to provide investors with responses to the current hunt for yield,” Gerald Harlin, executive chairman of AXA IM, said in the statement.
–With assistance from Jack Sidders.
Photograph: The AXA SA company logo sits outside the offices of AXA U.K. in London on Monday, June 14, 2010. Photo credit: Jason Alden/Bloomberg.
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