“We have one of the best global fixed income and TAA products in the world,” he says. “We are also at the top in terms of performance. Clients who are invested in our products, as well as those of our competitors, tell us that we are the best among them.”
 Bold statements indeed. Standard & Poor’s can reveal that since launch in 2001, CAAM’s Global Bond Institutional fund has consistently outperformed the JPMorgan Global Traded index. “Bruno is very advanced compared with others, and the only one creating alpha at Crédit Agricole,” says the head of a major French institution that regularly buys his funds.
 But the firm’s efforts to build a portfolio of UK-based clients have yet to pay off. According to Mr Crastes, CAAM established a London operation in 1999 as a platform for winning business in the UK and to have the global fixed income and currency management teams located closer to “their natural market”. “Since then, operations in the UK have grown dramatically and we now manage €25bn of assets for clients worldwide,” he says. “We have won more than €5bn in new assets in each of the last two years.”
 The global fixed income team won €700m of new business in 2003 and €1.8bn in 2004 from UK, European and Asian clients. TAA products pulled in €4bn in 2003 and €3bn in 2004.
 In contrast, he says, the firm has only just started to make inroads into the UK pension fund market. He says this market is “very macho”, summing up the difficulties that a French-based firm like CAAM faces in attempting to make a breakthrough.
 “Competition in the UK is fierce. Companies are well established. When you are a new player in a market where players have contacts and they are used to dealing with certain companies, it is difficult,” he says.
 Mr Crastes also admits that CAAM’s rivals in the UK are perceived as better outfits. Nevertheless, he says he is sure that “at a certain point in time”, the firm should be able to break into the market and win mandates.
 On the other hand, according to Mr Crastes, CAAM enjoys a big advantage over its competitors. “We have the French flavour of being technology-oriented, mathematical and quantitative. In terms of TAA, when investors think of GSAM or BGI, it makes a lot of sense to go for Crédit Agricole because we are different.”
 He is aware, though, that appeals to Gallic savoir faire alone will not win clients; he acknowledges that it takes time to settle into a new market and create the contacts necessary to attract new business.
 “We are in the process of making ourselves known to UK pension funds and showing that we have something to bring, which is a diversified approach to global bonds and a world class track record. For instance, we have been managing TAA in France since 1999 so we have a long track record that UK investors can look to. Our strategies and our six-year track record are outstanding,” he says.
 “Our main weakness now is not the quality of our products but the fact that UK institutional investors are just starting to hear about CAAM.”
 But Mr Crastes says that CAAM is planning to build a long-term presence in the UK and can afford to take its time in doing so. “We want to be a major player, not tomorrow, but in the coming years. We are patient; we are not driven by short-term gain.”
 In highlighting how CAAM’s investment approach differs from that of its competitors, Mr Crastes contends that all Anglo-Saxon houses operating in the UK market manage money in the same way. Where CAAM’s investment process places great emphasis on portfolio construction and objective value in risk balancing, its competitors put more faith in market forecasting, he says.
 “Before taking any investment position in the UK and the US, you have to set up your market forecast. In continental Europe, sophisticated risk-balancing techniques are much more apparent. Market forecasting is not difficult. Good market forecasting is difficult.
 “On the one hand, investors use managers who create value from their capacity to forecast markets. This method is not stable or robust. On the other hand, we have shown we are able to create value without relying on market forecasting, because of the quality of the portfolio construction and the risk diversification of the positions.”
 This greater emphasis on portfolio construction is, according to Mr Crastes, what differentiates CAAM’s global fixed income investment process from that of its competitors. Another key part of that process is the use of currency management, he says.
 “We really think that when it comes to allocating the risk, currency management is a good provider of alpha. The best performing managers in global fixed income are the ones using currency management extensively,” he says. Of €150.1bn of total bond assets under management, €27.25bn is run in global fixed income portfolios for clients worldwide.
 Mr Crastes also highlights the way other managers handle TAA mandates. As he sees it, the challenge in TAA is to achieve the optimal diversification of managers. He claims there is a risk that the managers chosen could all underperform at the same time if they are using the same strategy. So he draws a clear distinction between asset allocation and what he calls “alpha allocation”: the latter shifts the focus to manager selection.
 “When you go for TAA, you are opting essentially for a balanced portfolio with a very wide investment universe. But to achieve this optimal investment scenario, you have to diversify your managers and then do a lot of work to check if they are really creating alpha,” he says.
 “This is tricky. Alpha allocation is a different proposition. It is not a case of saying that you like equities or bonds. It involves asking: why do I like this manager and that manager? Are they diversifying within each other?
 “To create alpha this way, you have to be very clear about your manager selection process and very good at carrying it out,” he says.
 Selecting the right external managers is only one important step towards achieving alpha. Mr Crastes says that to maximise their chances of generating outperformance, managers must be give a large investment universe, free from benchmark constraints. “This is better than, say asking an equity manager to outperform the S&P 500.”
 CAAM’s TAA products comprise a series of proprietary Value-at-Risk (VaR) funds, which contain a total of €10.6bn of assets under management. The firm has started selling its VaR funds to funds of funds in the UK but not yet to pension funds.
 Again, Mr Crastes does not let a surfeit of modesty prevent him from praising his own products. He confidently asserts that CAAM’s VaR funds are the most transparent and cheapest in the market. “They are valued daily and are completely liquid,” he says. “We are the only managers in the world performing daily valuations in our TAA strategies. Our competitors value their funds bi-weekly or monthly.”
 His sales pitch is again tempered by an admission that CAAM is little-known in the UK. “We have had some TAA successes in the Netherlands. I am optimistic for the UK because some of our clients in the Netherlands told us that we were the best TAA manager in the world. But if you ask a UK pension fund interested in TAA to give you the names of the three leaders in the business, they will not say CAAM.”
 Mr Crastes reveals that the popularity of CAAM’s global fixed income and TAA strategies has led to certain capacity problems, which it is trying to address.
 Outside of its home market elsewhere in Europe, CAAM is winning significant amounts of global fixed income and TAA business in Italy and Spain. For now, the UK is proving a tougher nut to crack but Mr Crastes says that Crédit Agricole is starting to get on the lists of the all-powerful investment consultants.
 However, recognising that hubris has a limited impact, he reflects: “You need time to convince people in the market and convincing is about showing you are the best and not simply saying it.”

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