Asset Management Industry


What is asset management?

Asset management refers to the professional management of collective investments, an activity that involves investing and managing capital.
Asset management can be carried out:

  • on a proprietary basis, when an institution or company seeks to earn a return on its own assets by allocating and managing its own portfolio
  • on behalf of third parties, when individual or institutional investors delegate the management of their savings or capital to a financial intermediary, generally an asset management company, which is compensated for this service.

Asset management takes two forms:
– portfolio management or individual management under a mandate from an individual, company or institutional investor
collective management through a collective investment scheme such as a mutual fund or a unit trust. Investors acquire shares or units in a portfolio, often for a small outlay, thus gaining access to sophisticated management techniques, risk sharing and other advantages.


The AFG is the professional organisation that represents the French asset management industry.

The asset management industry

Allows individual (“retail”) and institutional investors to diversify risks through professional expertise, to access the market with economies of scale, and to benefit from investment techniques that would be unavailable to most of them on their own.

The originality and strength of the French asset management industry lies in its diversified and secure range of products, specialised firms, and regulations that are suited to the specific characteristics of this business.

The industry is governed by a set of strict laws and regulations, stemming from domestic and European sources. These measures evolve periodically as the industry changes. French regulations stipulate that all asset management companies are subject to the supervision of the market regulator, Autorité des Marchés Financiers (AMF), and that companies incorporated in other countries must be authorised by their home-country regulator to do business in France.

Investment mandates

The investment mandate forms the legal basis for asset management. It is a contract whereby an institutional or retail investor delegates the power to carry out transactions in a securities portfolio to a financial industry professional. The investor is free at any time to buy or sell units or shares in a collective investment scheme or to terminate a management mandate.

The manager has two main obligations under the mandate:

  • fair dealing: the management company and its managers must act solely in the interest of the investor. This principle is imposed by the regulations and the industry code of conduct.
  • best-efforts: the management company must have adequate financial, technical and human resources to provide the investment services it offers.

In the case of individual management, the mandate takes the form of a bilateral contract or written agreement signed by both parties.

  • France’s Monetary and Financial Code and the general regulations of the AMF require all management companies to sign a written mandate with retail customers. The mandate must stipulate the customer’s qualifications, the investment objectives, the benchmark(s), disclosure procedures, the term of the mandate and termination procedures, as well as the procedure for compensating the management company.
  • For professional customers, a written agreement is not required because the mandate is governed by the freedom of contract.
  • In the case of collective management, subscribing for units or shares implies that the investor accepts of the management contract, evidenced in the offer document or simplified prospectus.

Collective investment schemes

The term “asset management” covers a variety of products and services. In France, the first collective investment scheme was the open-end investment company, or SICAV, founded back in 1963. Today, there are nearly 11,000 schemes, not only SICAVs but also unincorporated common funds (FCPs).

What is a collective investment scheme?

Collective investment management is carried out through collective investment schemes, commonly referred to as investment funds. These schemes are financial arrangements that enable end investors (individuals, companies, institutions, etc.) to pool their capital and invest in a portfolio of transferable securities or real estate.

When investors buy into a scheme, the scheme issues new units or shares, which become the investors’ property. A scheme share or unit is itself a transferable security issued by the management company and its price is called the net asset value.

Article L. 214-1 of the Monetary and Financial Code provides a complete list of collective investment schemes:
–    Undertakings for collective investment in transferable securities
–    Securitisation vehicles
–    Real estate investment companies
–    Forestry investment companies
–    Collective real estate investment schemes

This means that a collective investment scheme is an intermediate institutional investor and its assets are managed by the management company, which acts solely in the interest of the end investors (i.e. the unit holders or shareholders). These funds are invested in financial instruments such as equities, bonds and debt securities.

Collective investment schemes are savings products with three key characteristics:

  • they give investors a stake in a securities portfolio (equities, bonds, etc.) held jointly with other investors
  • the portfolio is managed by a professional
  • units or shares in the portfolio can be redeemed for their net asset value at any time.

Legal characteristics of collective investment schemes

In France, there are two main types of scheme, which are distinguished solely on the basis of their legal structure:

  • the société d’investissement à capital variable (SICAV), or open-end investment companies, which is incorporated as a legal person like any other company. The investors own shares in the SICAV, which are issued as and when subscription orders are received.
  • the fonds communs de placement (FCP), or unincorporated common fund, where investors own units in the fund.

Collective real estate investment schemes, can take two forms: a société de placement à propondérance immobilière à capital variable (SPPICAV), or open-end real estate investment company, which is equivalent to a SICAV, and a fonds de placement immobilier (FPI), or unincorporated real estate investment fund, equivalent to an FCP.

Examples of special-purpose collective investment schemes

The asset management industry has developed various products to meet investors’ needs. These include: