Face to Face

August 18, 2013 7:45 am

Lyxor looks to innovative strategies for global growth

Inès de Dinechin illustration

One of the few women to have risen to the very top of the fund industry, Lyxor’s Inès de Dinechin appears unfazed by taking on the roles of chairwoman and chief executive at the $100bn French asset management house.

But multitasking is nothing new to Ms de Dinechin who has managed to combine raising four children with a long career in investment banking, spent entirely at Lyxor’s parent company Société Générale.

She now faces fresh challenges, in particular rejuvenating Lyxor’s underperforming exchange traded funds arm (ETF) after the exit of four senior executives since November – the most notable being Alain Dubois, the long-serving non-executive chairman who was deeply knowledgeable about regulatory affairs and an influential voice in the European debate over ETF regulation.

But Ms de Dinechin firmly rejects any insinuations that Mr Dubois left in a cloud of smoke and that tensions over strategy led to his exit to index provider MSCI. She also dismisses market chatter about a possible sale of the ETF business to rival Amundi.

“ETFs are at the heart of our strategy today and will be over the next five years,” she says, pointing out that the ETF sales and marketing teams were strengthened after the appointment of Arnaud Llinas as global head of Lyxor’s ETF and indexing business in December.

In fact Ms de Dinechin expects to see much clearer differentiation between winners and losers in Europe’s fragmented asset management industry, warning “not all managers will survive this difficult period”.

She insists that Lyxor has “strong cards to play” in the consolidation and convergence processes that will shape the market, adding that Lyxor’s primary objective is to pursue significant organic growth.

It is “not easy” to buy success via acquisitions, Ms de Dinechin says. But the French house will be prepared to act opportunistically if it can snap up some of the sophisticated strategies or smaller managers made available by market movements or regulatory pressures – such as those spun out by the proprietary trading desks of banks after the financial crisis.

Her preference would be for “complex cooking that provides a very powerful meal”, a reflection perhaps of her own varied career, which has involved managing sales, engineering and trading departments for SG.

Lyxor divides its offering into “three pillars” comprising that of passive strategies – including ETFs, alternatives and investment solutions, aimed particularly at larger investors.

Keen for Lyxor to be seen as “innovative and different”, Ms de Dinechin emphasises that “what determines success is the ability to deliver performance”. She also argues that investors want to see a true alignment of their interests with that of asset managers and that paying performance bonuses and variable salaries are the best way to ensure this. As such, she welcomes the European parliament’s recent decision to reject a cap on fund managers’ bonuses, calling the move “pragmatic”.

However, plans to impose a Europe-wide financial transactions tax would be “very detrimental” to investors and “a disaster” for economic growth in Ms de Dinechin’s view.

Speaking while on a visit to SG’s offices in London, she moves to the subject of hedge funds where she expects investors’ requirements for “robust sustainable returns” to drive greater convergence with mainstream mutual funds. Hedge funds are not a “different world”, says Ms de Dinechin, arguing that investors have started to analyse such strategies alongside traditional active mutual funds.

Currently, she says, only a limited number of hedge funds are truly investable, as few as 50 larger players from a total universe of more than 10,000. She points out that investors who use Lyxor’s managed account platform have access to detailed analysis of a wide range of hedge funds, greater operational security, and weekly liquidity so that entering and exiting positions are straightforward.

With more than 100 professionals dedicated to its alternatives business, Ms de Dinechin sees Lyxor’s role as “sitting alongside” investors, helping them understand the complex language of hedge funds and the drivers of their performance.

“Hedge funds can be more nimble and opportunistic than traditional managers. They offer a more diversified approach and many more ways to extract performance from an underlying asset class. We expect them to become much more mainstream in investors’ portfolios.” Some of Lyxor’s US clients have a third or more of their assets allocated to hedge funds. And the prospect of being able to promote Lyxor’s services on US television after an end to the ban on hedge fund advertising appeals.

“Yes, definitely,” says Ms de Dinechin, who unsurprisingly believes there is a good fit between the appetite of US investors for innovative and sophisticated investment strategies and Lyxor’s own offering.

The plan to offer more sophisticated investment strategies extends into Asia where SG has partnered with Baosteel, the largest listed Chinese steel company, since 2003 in what was one of the first joint venture fund management companies in China.

With Lyxor’s help, Fortune – the Chinese JV – is pursuing a range of product innovations, including developing its expertise in ETFs and model-driven active management strategies. It is also starting to work on fixed-income products and has launched its first hedge fund strategy (a Winton CTA model) for Chinese investors.

“So we see multiple opportunities to deliver performance to investors, in Europe, the US and Asia,” says Ms de Dinechin, fully confident in the cards that Lyxor holds.

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Curriculum vitae

Inès de Dinechin

Born 1966

Education

Université Paris-Dauphine, degree in Economics

Institut d’études politiques de Paris, Market Finance MBA

Career

1991 Joins Société Générale, corporate & investment banking

1994 Head of Derivatives Sales for France

1997 Head of European Derivatives Sales

2000 Global Head of Derivatives Sales

2007 Global Head of Fixed Income Structured Products

2009 Global Head of HR

2013 Chairman of the Managing Board, Lyxor Asset Management

Based in Paris, she is a member of the enlarged SG CIB Executive Committee

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Lyxor Asset Management

Established 1998

Assets under management $100bn

Number of employees 600 worldwide

Offices Headquartered in Paris, with offices in London, Amsterdam, Luxembourg, Dublin, Frankfurt, Madrid, New York, Tokyo, Shanghai and Hong Kong

Ownership Owned by Société Générale

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