Full-year 2019 earnings

• Strong achievements for the Alternatives platforms in a positive but competitive market context
• Resilient performance for the Core investment platforms
• As a responsible active asset manager, AXA IM continues to drive change

“AXA IM has demonstrated resilience in 2019 despite the industry navigating a challenging low interest rate environment. In this context, having a strong and leading alternatives offering is key to bringing value to our clients, and we have further strengthened our expertise in this space.”

“Thanks to the diversification of our asset classes, segments and geographies, we have recorded stable revenues. Our assets under management have progressed well and reached a record high of €801 billion. We have seen positive flows of €13 billion, with third-party clients having invested mostly in our fixed income and alternatives products.” said Gérald Harlin, Executive Chairman of AXA IM.

“The 2020s are likely to be the decade of transition, and as a responsible active asset manager, we are committed to playing a central role in pressing for change to benefit our clients and the wider society. We strongly believe that we can make an impact, not only through our investments but also through our voting and engagement initiatives with the companies in which we invest, on a range of issues including governance, climate change, biodiversity and gender diversity¹ . Finally, impact can also be achieved through thought leadership and innovation. Our call for, and subsequent involvement in the launch a new transition bonds asset class, demonstrated how partnering with AXA and our peers has proven efficient in contributing to the transition towards a low-carbon and resilient economy.”

“We are now preparing the next phase of our development focusing on profitable growth, becoming an even more responsible company and making sure we always put clients first.” added Gérald Harlin.

Full-year 2019 key highlights

All figures are as of end 2019, unless otherwise specified.

Net inflows amounted to €13 billion, including third-party² net flows of +€4 billion. Third-party flows derived largely from flows into Fixed Income and Alternatives strategies, while AXA IM’s Chinese joint-venture recorded outflows, as a consequence of the application of new laws, similarly to 2018.

Assets under management amounted to €801 billion, up €71 billion compared to the end of 2018, reflecting positive market effects and net inflows.

Revenues were stable at €1,249 million³ , mainly driven by higher management fees but notably offset by lower performance fees reflecting the non-repeat of 2018 exceptional levels.

Underlying earnings were down 3% to €264 million⁴ , due to a higher average tax rate, partly offset by lower expenses.

Strong achievements for the Alternatives platforms in a positive but competitive market context

AXA IM provides a wide range of alternative investment strategies to its clients. Assets under management across the alternatives offering represent €137 billion, up 13%, driven by appetite from institutional clients.

AXA IM - Real Assets further expanded its third-party investor base and increased its presence in Europe, Asia and North America, notably through its open-ended equity fund range. Its flagship pan-European core strategy, which is invested across 12 different countries and 5 investment sectors, accelerated in 2019 and is now close to €4 billion in assets under management.

In a very competitive environment, AXA IM - Real Assets leveraged its diverse skill set across the platform to execute a number of large, high profile and complex transactions, including the acquisition of a €1.1 billion prime European office portfolio through the public to private acquisition of US REIT Northstar Realty Europe, while reinforcing its position in alternative real assets classes, development and infrastructure globally.

Structured Finance’s new and existing strategies recorded many successes, with strong third-party inflows. This was driven by the CLOs and Regulatory Capital Strategies, but also successes in areas such as mortgage loans and Global Secured Assets. More recently, the 11th US CLO was closed, bringing AXA IM’s total CLO assets under management to €5.8 billion.

Resilient performance for the Core investment platforms

Core Investments brings together the Fixed Income, Framlington Equities and Multi-Asset platforms at AXA IM.

Fixed Income recorded a very strong performance across the board. Inflows were mainly driven by the Buy and Maintain business in the UK for third-party institutional clients, and the Active Fixed Income business in its inflation and credit mandates. ESG-integrated strategies have attracted strong interest from clients, with several of them, like those focussed on green bonds, seeing high increases in assets under management.

In Multi-Asset, the fully ESG-integrated Optimal Income range continued to register regular flows mostly coming from European retail and wholesale clients. The range now exceeds €4 billion of assets under management.

On the equities side, the AXA IM Framlington Equities’ Thematics fund range now accounts for close to €5 billion of assets under management, and welcomed new additions with the launch of the Clean Economy and Fintech strategies, and more recently the All China Evolving trend strategy.

The Quant Lab has further developed its expertise to deliver quantitative tools and solutions for portfolio managers and clients. A decision-making tool has been deployed for portfolio managers, leveraging AXA IM’s data lake. Strategic asset allocation and investment profiling tools have also been developed.

AXA IM Rosenberg Equities’ Sustainable Equity strategy saw significant growth in the number of investors. Additionally, a UN SDG-aligned⁵ strategy was developed for AXA with an explicit focus on companies that help mitigate climate change or improve the transition to more sustainable energy sources.

As a responsible active asset manager, AXA IM continues to drive change

AXA IM was among the first asset managers to commit to push for progress through investment choices with a view to drive change for the benefit of clients and society. 2019 has been a year of acceleration with a deeper commitment to ESG integration, impact strategies and game-changing industry initiatives.

AXA IM’s ESG product offering, as well as the impact range, were further enhanced. Indeed, the year saw the launch of the listed impact strategy, Clean Economy, as well as the third and fourth private market strategies - respectively focusing on climate & biodiversity and healthcare & financial inclusion in emerging countries. Moreover, AXA IM now has a total of 24 SRI labelled strategies in France and Belgium.

Finally, following the call to action and establishment of the transition bonds guidelines in June 2019, AXA IM worked together with AXA Group on the issuance of a €100 million transition bond by Credit Agricole CIB – the first to be issued under the guidelines. AXA IM also took a leading role in the Climate Transition Finance Working Group created under the auspices of the International Capital Market Association’s Green and Social Bond Principles. This illustrates AXA IM’s focus on engagement with policy-makers, industry groups and companies to help sustain the health of financial markets and ensure the efficient allocation of capital.