Paris - CDC subsidiary Novethic, a resource centre for socially responsible investment, reviews the SRI market in France, reporting substantial growth in 2003. Two major SRI trends have emerged in the year just ended: both the number of funds and the amounts invested in them rose sharply in 2003, as France's major players begin to play a bigger role.

A rapidly expanding market
The Novethic Indicator, a quarterly reading of the French SRI market, reveals the principal changes that occurred over the last year. At year-end 2003, the French market offered 108 funds to choose from, as opposed to 80 one year earlier and around 60 at the end of 2001. This puts average growth at 35% per annum.

Total assets under management (figure includes funds domiciled in France and other countries)reached 4.4 billion euros at year-end 2003, versus 2.5 billion one year earlier. If funds registered in other countries are excluded from the calculation, total AUM is 2.8 billion euros, compared with 1.25 billion euros at year-end 2002 and 920 million at year-end 2001. The increase is nothing short of spectacular: total funds under management rose by a factor of more than 2.2 in one year, and by tenfold in five years.

French vehicles show strength
This exceptional rate of growth in the French market is partly attributable to the decision by BNP Paribas Asset Management to switch a range of retirement funds with total assets valued at 550 million euros to SRI management, and to create a large bond fund. As a result of these moves, BNP PAM became the SRI market leader in 2003 with more than 900 million euros under management, overtaking IDEAM (Crédit Lyonnais), CDC IXIS AM, Macif Gestion and AXA IM.

Most of these funds build their portfolios on the basis of sustainable development factors and analysis, which take social, environmental and corporate governance criteria into account. The number of more narrowly focused funds (i.e. built on the basis of one of these criteria), or funds that select by exclusion, decreased in 2003.

Medium-term financial performance
In partnership with Amadeis, an independent investment consulting firm, Novethic also publishes a quarterly survey of SRI funds (Panorama des fonds d'investissement socialement responsible) for industry professionals. It lists, analyses and gives an SRI rating to all pure and diversified SRI equity funds available in the French market as of December 30, 2003, and reviews fund performance.

In 2003, SRI funds suffered a slight counter-performance versus the previous year, but their global three-year performance was better than the market average. The impact of the SRI factor on portfolio performance is still difficult to isolate. Since SRI funds tend to invest in fewer small and mid cap companies, they were not able to capitalize on their outperformance versus large caps in 2003. The fund managers surveyed said they placed more emphasis on steady returns over the medium to long term, which is also key to the SRI approach.

The Novethic Indicator is free of charge and may be downloaded from the Novethic website, whose address is http://www.novethic.fr/novethic/images/upload/Indicateur_Q4_2003.pdf

If you write anything on this, please, be kind enough to send it to us once printed.

Novethic

Novethic

A subsidiary of Caisse des Dé©pé´ts et Consignations, Novethic is a leading center for resources, information and expertise pertaining to SRI and corporate social and environmental responsibility. Its web site http://www.novethic.fr is a comprehensive resource for responsible economic actors.

More from Novethic