Institutional Investment - October 17, 2007

Interview with Gilles Glicenstein

In this month's interview, we discuss the links between research and business and BNP Paribas Investment Partners' strategy with Gilles Glicenstein, Chairman of BNP Paribas Asset Management and Head of BNP Paribas Investment Partners.

Gilles Glicenstein

Why has BNP Paribas AM chosen to endow EDHEC’s chair in asset-liability management and institutional investment?

Gilles Glicenstein: BNP Paribas Asset Management is a European leader in traditional, indexed and structured investment management. Our expertise both in European fixed-income markets and in asset allocation allows us to bring added value to our clients by defining ALM solutions best-suited to their situation.

EDHEC is globally recognised as a centre of excellence for asset management and alternative investment research. Over the years it has developed a genuine expertise in the fields of asset management, fixed income securities, alternative investment and risk management. The aim of the EDHEC Risk and Asset Management Research Centre is to produce research that meets the most stringent academic requirements.

By putting together BNPP AM’s expertise and that of the EDHEC Risk and Asset Management Research Centre, we are able to accompany our clients along new paths. We aim to develop new approaches and identify the best methods of hedging liability risk while optimising management solutions. BNPP AM and EDHEC share the conviction that there is a trade off between hedging liability–related interest rate risk and seeking out-performance through the active management of risky asset classes.

This trade off is complex, but could be monitored using a dynamic model. Taking this route, in collaboration with EDHEC, could generate new LDI solutions which better meet the needs of our institutional investors.

What do you think makes EDHEC’s asset-management research original?

Gilles Glicenstein: EDHEC has demonstrated an unrivalled ability to position itself at the crossroads between investment professionals (asset managers / investors, etc.) and academic researchers by developing a concrete and pragmatic research programme.

EDHEC has also been successful in stimulating and facilitating debate between the industry players based upon its state-of-the-art academic research. Such dialogue has the power to propel the asset management industry forward and into new fields of study. One of EDHEC’s strengths is designing pragmatic applications that enable companies to improve their investment and risk management processes in demonstrable ways.

I am convinced that the EDHEC Risk and Asset Management Research Centre has a key role to play in advancing the asset management industry by creating a valuable link between financial research and its subsequent application in practical measures. This can help the industry address new issues and new challenges.

You have just created BNP Paribas Investment Partners, a new commercial brand bringing together the asset-management affiliates of the BNP Paribas group. What is your strategy for this new brand?

Gilles Glicenstein: In just a few years, our company has achieved widely recognised expertise across a range of innovative products and new markets. Over the last 5 years the number of partners has grown from seven to fifteen, and assets under management have swelled from €170bn to €344bn. We have implemented a distinctive business model that allows us to bring together our specialised capabilities in asset management under the brand name of BNP Paribas Investment Partners. This strategic move offers investors easy access to all the latest innovations in asset management and, strategically, it enables us to strengthen our position as a multi-specialist asset manager.

The creation of the BNP Paribas Investment Partners’ brand name reflects extensive changes in the asset management industry: Today, competition comes not only from rival fund managers but also from other sources: the pace of development has accelerated sharply with the influence of hedge funds and private equity managers, as well as the ever-increasing complexity of techniques and investment products, and the proliferating opportunities in new markets. With BNP Paribas Investment Partners, we are well positioned to address these evolutions and extend our positions around the world.

Are you not afraid that imposing the administrative duties of a large corporation on your affiliates will limit their creativity in some way?

Gilles Glicenstein: BNPP IP provides new partners with the advantages of a major player. First of all, a strong, international sales force enables the distribution of our partners’ products throughout the world and brings the boutiques’ products to a clientele that may not have previously had access to them. This distribution model permits managers to focus on their real expertise: the management of funds. A large group also brings financial strength in the form of seed capital that allows for the incubation and subsequent launching of new strategies. In addition, this structure brings welcome liquidity to the boutiques’ shareholders. Finally, we respect the investment autonomy of our partners and protect their entrepreneurial culture, as they are both invaluable assets.

You are a member of EDHEC Risk and Asset Management Research Centre’s international advisory board. What do you think of the links between research and business in the asset-management industry?

Gilles Glicenstein: I’m convinced that the link between research and business in the asset-management industry is, and has to be, strong because this link is necessary for developing many innovative products.

About Gilles Glicenstein

Gilles Glicenstein has been Chairman of BNP Paribas Asset Management (BNPP AM) since June 2005. Earlier, he had been Chief Executive Officer of the firm. From 1996 to 1999, he acted as Executive Vice-President of BNP Gestions (the asset management arm of BNP). He joined BNP Group in 1994 as Director of Strategy & Development and Executive Board Secretary from after having spent four years as a financial inspector and a treasury official at the French Ministry of Finance. During this period, he also lectured in Economics at the "Ecole Nationale de la Statistique et de l’Administration Economique" (ENSAE) and at the "Institut d’Economie Politique" in Paris.

Gilles Glicenstein attended the Ecole Nationale d’Administration (French National School of Administration) and the Institut d’Etudes Politiques (Institute of Political Studies), Paris. In addition, he is a member of the Executive Committee of the "Association Française de Gestion Financière" (French Association of Financial Management), and Director of Fischer Francis Trees & Watts, Fauchier Partners and Cortal Consors.

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