Even before the British voted to leave the EU, thus triggering one of the most catastrophic share price meltdowns in decades, extremely low interest rates were already making life difficult for institutional investors. “For two years now, we have faced the problem of interest rates being so low that they are in effect negative for investors,” says CEO and CIO Sebastien Barbe.
“Our response has been to become even more creative with our solutions.” Schelcher Prince Gestion focuses on carrying out highly precise analyses and creating innovative products that will still generate attractive returns for its clients. One solution in the face of these low rates is an original offer of loan funds to the economy with a conservative approach to rating and an extended network of connections across the economy to source supply.
The company began managing loans in 2014. Prior to this it specialized in convertible bonds. It offers a range of different investment vehicles varying in their geographic or sector focus and risk profile. “We have four billion EUR worth of funds under management and have built up a strong reputation in the market for flexibility and creativity,” says Mr. Barbe. “We have espoused a conviction-based management strategy based on the quest for returns rather than an indices-based approach. We bet heavily on small and medium-sized businesses and aim to seek out hidden value.”
Schelcher Prince Gestion’s customers are mainly institutional investors, private banks, family offices or funds of funds. International activities are limited with the focus firmly on the French market. “In order to make an accurate assesment of risk and potential, you need good local representation and contacts,” says Mr. Barbe. “This is very much a face-to-face business in which personal contacts are hugely important.” With so many different factors influencing the market and pulling it in different directions, analysis is an ongoing task.
“Macroeconomic factors such as Brexit, the wider geopolitical situation and low interest rates exert a strong influence, but micro factors such as the latest industry sector reports or financial statements from the big industry players all play their part too,” insists Mr. Barbe. “We see the outlook as positive. The French economy is actually performing better than it is often portrayed, and this offers us opportunities.” One thing that is fairly certain is that interest rates will remain low for the foreseeable future. “We are currently locked in a cycle of rock-bottom interest rates, which leaves central banks with very little room for market corrections,” says Mr. Barbe. “Although some central banks have ventured an increase, they have been quickly forced back down by market pressures. The answer for some companies is to increase their exposure to risk in search of higher returns. That is not our strategy.”