France: Invesco PowerShares

I’ve had a number of meetings with Invesco PowerShares representatives around the globe and each meeting has been insightful and very valuable.  My meeting with PowerShares in Paris also met this high standard of quality.  I had the pleasure of meeting with Thibaud de Cherisey and Jean-Baptiste Lavollay from the Paris Invesco PowerShares team.

Ryan Hessenthaler with Thibaud de Cherisey and Jean-Baptiste Lavollay

Thibaud suggested we talk over lunch… which is always a great idea in my mind.  We walked a few blocks from the office to a lovely little French restaurant.  The excellent food was only surpassed by the even more outstanding conversation.  A final shout-out and thanks to Kevin Connolly for his help in coordinating all of the PowerShares meetings around the globe.

Like many of his PowerShares colleagues, Thibaud is a pioneer in the ETF space, with his particular focus on the introduction and growth of ETFs in Europe.  He noted there are a comparable number of ETFs traded in Europe as in the U.S., but the total assets in European ETFs is less than 10% of that seen in the U.S.  Lots of room for growth.

Europe is 5-6 years behind the U.S. when it comes to ETFs, including their widespread use, the types of investors who use them, the strategies utilizing ETFs, distribution, education, etc.  Thibaud noted that when it comes to adoption of new products and ideas, the Italians tend to be the most innovative investors in Europe.  There’s a great deal of family wealth in Italy and the Milan PowerShares office is seeing some phenomenal growth in assets.  Nearly half of all the assets in PowerShares ETF products in Europe comes from Italy.

Both Thibaud and Jean-Baptiste noted the investment mindset in Europe is quite different than in the U.S.  Europeans widely believe that investing should be left to investment professionals.  There are very few Europeans who try to invest on their own.  This is a relatively new mindset as many tried (and failed) in recent years.  Several very bad IPOs and popular company melt-downs have moved many Europeans in the direction of seeing professional investment advice.

I should note that our meeting just happened to be on “Black Monday,” so the topic of volatile markets certainly came up.  They noted that there always seems to be a “crisis” in August, so this one didn’t come as a particularly big surprise.  Jean-Baptiste even commented that he recently read an article that was celebrating the fact that August was essentially done and the markets had somehow escaped a crisis.  We both commented on how that writer wishes he could pull back that article.

I asked about the future of Europe and the Euro… you know, the light, easy questions everyone discusses over lunch.  They emphasized that Europe is not one country and that everything is still very local.  Local laws, rules, regulations, taxation, customs, practices, etc. all make doing business in Europe exponentially more difficult.

Beyond those issues, the core issue of different languages throughout Europe is a huge challenge.  People are simply not the same throughout Europe.  The countries in the norther, colder regions see the world much differently than the countries in the southern, warmer regions.  They suggested we consider the differences between the U.S., Quebec (because of French speaking), and Mexico when we think about how Germany, France, and Italy might see things a little differently.

As with most of my blog posting, I’m just giving you a little taste of some of the things we discussed.  For greater details, please don’t hesitate to reach out to me at ryan@luntcapital.com.  It was an outstanding conversation and I want to offer my sincere thanks to Thibaud and Jean-Baptiste for their graciousness with their time, their insights, and their recommendation for the restaurant that produced such a wonderful meal.  The pastry we had at the end of the meal was just about the finest thing I’ve tasted on this trip… and I’ve had some really great food so that’s a very high bar.  Magnifique!

And as if the meal and conversation weren’t enough, they also sent me on my way to my next meeting with a brand new umbrella.  They just couldn’t imagine me showing up at the meeting, entirely soaked through and insisted I take the umbrella.  I explained that I could certainly just buy an umbrella at the corner store… but they insisted, and I reluctantly accepted.  I was exceedingly happy to have it as the rain picked up and the walk was a little further than I expected.  Kudos again to the PowerShares standard of service and care.  Always going above and beyond.  Merci beaucoup.


Special thanks to Brennan Staheli, Michael Willden, and the Lunt Capital team for their contributions to this report.