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Distributor interview – François Hullo, BNP Paribas IP

The investment industry has had to cope with many irregular twists and turns in recent years, in the wake of economic crises and geopolitical upsets. BNP Paribas IP’s François Hullo’s job is to try to predict the shape of things to come…


Dylan Emery

An erratic movement of assets has been a feature across many asset classes so far this year, and Francois Hullo, BNP Paribas’ head of external distribution, doesn’t think the trend is going to change any time soon.

“We’ve seen investors go back and forth between US and European equities,” he observes (see chart which shows net flows in US and European equity funds). “The first part of the year we saw switches to Europe, then at the end of the year we are seeing a switch back to US equities again.” 

Despite the ever-present threat of bond prices collapsing, there has still been money flowing into fixed income – mostly into corporate bonds and more niche bond strategies. After years of holding on, demand for govvies finally dried up in 2016.

“Even the Italians have had enough of government bonds,” says Hullo. “They are looking for high yield. We have had some money come into our corporate bond buy and hold funds. In the Netherlands we had some inflows into our US mortgage fund, and from the Nordics and Asia we also recently had inflows into corporate bonds.” 

Passive aggressive

One big ongoing trend is the increasing use of passive investments among fund selectors. This is behaviour Hullo can completely understand.

“We have not seen a lot of alpha from active equity managers over the past year so many people have chosen passive.

“But a lot of asset classes are not appropriate for passive. The more specific classes in equities or bonds need to have active fundamental management. With large cap European or US equities, it is easy to go for passive but when you are talking about mid cap and small cap, an active manager is more interesting.”

It is in this area that Hullo has had recent success, attracting money to its small-cap Europe, US and Japan funds. The latter might surprise some since Japanese equities are generally regarded with suspicion by most fund selectors. at the moment.

“Of course, Japan is not a large part of the asset allocation of our clients, but we have seen some decent inflows,” says Hullo. “On the US side, we are starting to see money going into equities. We are promoting the small-cap fund, which is where we will be able to capture the growth the Trump Effect will provide next year with his policies.” 

Alternative outcomes

While we wait for bond markets to be hit by higher interest rates, and most equity markets are looking overpriced or uncertain, there has been growing interest in alternatives. BNP Paribas has a wide range of such products, but many are not yet set up for the wholesale fund selector market.

“We do have some offerings, but if we are talking about private equity or loans, they are less liquid and in a non-Ucits format, so they are much more for my colleagues in the institutional part of our business,” says Hullo.

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