Ossiam, an affiliate of Natixis Investment Managers, has experienced significant outflows from its exchange-traded funds over recent months, totaling €1.4bn over the past six months. Despite the European ETF industry attracting €67.4bn in inflows over the same period, Ossiam’s ETF assets under management have dropped from €7.5bn to €6.7bn. The trend among Ossiam’s clients has been a transition from environmental, social, and governance investments to more passive approaches, leading to outflows in their ETFs.
While Ossiam has seen consistent outflows in its ETF offerings this year, its parent company Natixis IM has had €1.3bn in net inflows into its European long-term funds. However, Morningstar takes issue with Ossiam’s annual fees, which are considered steep for their passive range, averaging more than 40 basis points. Additionally, Ossiam has a substantial fund liquidation rate of 36%, and has recently closed some niche funds due to challenges in sustaining interest in specialized products.
The future of Ossiam’s offerings remains uncertain, with 11 of its funds having assets below €100mn. Many of their funds are smart beta or strategic beta strategies, but the market share of such funds has declined in recent years, currently standing at 5.6%. Investor behavior has been influenced by performance chasing, leading to a shift away from strategic beta ETFs towards market-cap focused investments. This trend has impacted Ossiam’s funds, particularly as the market has favored US technology stocks.
Ossiam’s outflows in April were primarily driven by a US-focused value ETF, which may be attributed to the underperformance of value compared to growth for an extended period. The manager mainly serves institutional clients, so the outflows may be the result of an asset allocation decision by one or a small number of investors. This trend of outflows from smaller ETF providers has been observed in the industry, with larger firms acquiring smaller players.
Overall, Ossiam’s struggles reflect broader challenges in the ETF industry, particularly in the face of changing investor preferences and market dynamics. As Ossiam navigates these challenges, its parent company Natixis IM continues to see inflows in its other offerings. The future of Ossiam’s ETFs remains uncertain, with the company facing pressure to justify costs and deliver returns that meet investor expectations.
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