IMG
Jean-Louis Charles : "We have implemented a hedging strategy for our entire equity portfolio until December 2021"

Jean-Louis Charles, Chief Investment Officer at AG2R LA MONDIALE, this strategy enabled the Group to remain calm in the first half of 2020 while remaining invested in equities. The strategy was carried out through the purchase of puts on the EuroStoxx50 index.

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Next-Finance : Can you tell us more about AG2R LA MONDIALE and the current amount of your assets?

Jean-Louis Charles : Created in 1905, AG2R LA MONDIALE is a French non-profit organization, a social and heritage protection group. Its governance is based on parity and mutualism. AG2R LA MONDIALE insures 15 million individual customers and 500,000 businesses.

The current amount of our assets is 120 billion euros, including 20 billion euros for “unités de compte” managed by our partners.

What is your current asset allocation? Has it been modified since the stock market crisis of March 2020? How has your solvency ratio evolved?

As of 12/31/2020, our asset allocation is as follows:

  • 83% interest rate products
  • 2% cash
  • 7.5% equities (mainly European)
  • 7.5% real estate

Our allocation is fairly stable over time and was not modified by the stock market crisis of 2020. It depends in particular on our constraints related to asset / liability management (ALM).

We have not yet released our solvency ratio for 2020. However, I can tell you that it should not be up (like the entire industry) from last year (221%).

Many institutional investors are putting their portfolios on the defensive in anticipation of rising risks. Is this also your case? Are you using specific hedging strategies?

Yes, we have implemented a hedging strategy on our entire equity portfolio until December 2021. This has allowed us to stay comfortable in the first half of 2020 while remaining invested in equity markets.

This strategy was achieved through the purchase of put options based on the Euro Stoxx 50 index.

Do you think that the current health crisis will strengthen investors interest in the ESG theme?

The movement was already underway before the health crisis and we believe it will intensify in the months and years to come.

In the fixed income markets, we must be aware that the choice to use SRI criteria automatically reduces our investment universe in the context of low interest rates that we are currently experiencing because it is becoming more difficult to find securities offering attractive yields.
Jean-Louis Charles, Chief Investment Officer at AG2R LA MONDIALE

Do you use ESG criteria in your management policy? Do you have projects or developments in progress on this subject?

Yes, both on fixed income and equity markets. However, in the fixed income markets, we must be aware that the choice to use SRI criteria automatically reduces our investment universe in the context of low interest rates that we are currently experiencing because it is becoming more difficult to find securities offering attractive yields. Regarding equities, we have an active voting policy on all our portfolio equities, while excluding companies linked to tobacco or coal by 2030.

Do you delegate the management of your portfolio to asset management companies?

No, we run the management of our portfolio exclusively internally. When we are not investing directly, we do so through external funds through our multi-management team.

Do you have profitability objectives for your portfolio? What was its performance in 2020?

We set performance targets by asset class. Thus, on the fixed income markets, in 2020, the average investment rate stood at 1.12%, compared with the negative yield of the OAT (‘obligations assimilables du Trésor’). On the equity side, last year we outperformed the Euro Stoxx 50 index by 1%.

We intend to develop our investments in private debt.
Jean-Louis Charles, Chief Investment Officer at AG2R LA MONDIALE

What will be your favorite subjects in the coming months? What asset classes do you plan to position yourself on?

Given the crushing of risk premiums on the interest rate markets, we intend in particular to develop our investments in private debt, even if this type of investment requires significant legal monitoring that we are in the process of putting in place internally.

RF 2 March

Article also available in : English EN | français FR

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