France’s FRR Looks to Private Markets for Higher Returns

CIO Salwa Boussoukaya-Nasr responds to low yields by moving into private credit and giving bond managers more flexibility over duration.


The job of managing French public funds comes with plenty of strings attached. Salwa Boussoukaya-Nasr is obliged by law to use external managers at €36 billion ($41 billion) Fonds de Réserve pour les Retraites (FRR), and the board, no doubt with politics in mind, takes a dim view of alternatives like hedge funds and catastrophe bonds. “There is no willingness to invest in those kinds of assets,” she says.

Yet Boussoukaya-Nasr is diversifying where she can. Created in 2001 to build up reserves for the French public pension system, FRR has only one liability: a requirement to pay €2.1 billion each year until 2024 to CADES, a fund for amortizing the debt of the country’s social security system. With that liability shrinking and a big pool of assets to put to work, “we can take more and more risk,” she says.

FRR has expanded into private markets over the past two years, with a preference for debt over equity because money can be deployed faster. In equities, which make up 30 percent of assets, FRR is overweight Europe and Japan, and uses smart beta — particularly low-carbon strategies — for more than a third of its holdings. In January the CIO’s team awarded €8 billion in fixed-income mandates to 11 managers, retaining the option to switch benchmarks to shorter-duration indexes if rates appear likely to rise, as the CIO expects: “They are too low, and at some point in the next two to three years they will go higher, especially in the U.S.,” she says.

Daughter of a French mother and a Tunisian-born father, Boussoukaya-Nasr, 46, grew up in the Paris suburbs and studied finance and management at the École des Hautes Etudes Commerciales de Paris. She headed asset allocation at Lazard Frères Gestion, then ran a long-only absolute-return fund at IXIS Asset Management before coming to FRR in 2006 as head of asset allocation. She moved up to CIO four years ago.

She may not have as much freedom as commercial managers, but running public money gives plenty of satisfaction: “It feels like it’s my money. It’s in everyone’s interest that the fund is run correctly.”

Return to “Europe’s Money Masters of 2016.”

2016 European Money MastersClick below to view profiles.

Investor Lifetime AchievementRoger GrayUniversities Superannuation SchemeGermanyStefan HentschelEvonik IndustriesU.K. CorporateTony BroccardoBarclays UK
Retirement FundCentral and Eastern EuropeKatrin RaheSwedbank Investment
Manager Lifetime AchievementPascal BlanquéAmundiNetherlandsMark BurbachBlue Sky GroupSmall CountriesPaul DroopBank of IrelandFranceSalwa Boussoukaya-NasrFonds de Réserve pour
les Retraites
SwitzerlandAdrian RyserMigros-PensionskasseU.K. PublicMark LyonEast Riding Pension FundScandinaviaHenrik Olejasz LarsenSampension