Fund operating expenses

Organisation and Human Resources

After significantly reducing its maximum headcount from 56 in 2010 to 48 in 2014, then stabilizing it in 2015 by aiming to promote internally, the FRR further strengthened its organisation in 2016 to be able to fulfil its role, recruiting experienced staff.

Following the decision in August 2015 to direct EUR 2 billion into financing the French economy, the Management Board, during budget discussions, expressed a desire to strengthen the FRR’s skill set by creating a specialist private equity position in 2016. This meant further recruitment, bringing the FRR’s payroll to 49 permanent employees, 41 of whom are on Caisse des Dépôts contracts.

The FRR will continue its efforts to secure processes and adapt IT and human resources over the coming years, while keeping control of spending.

The FRR’s costs

Total expenses for 2016 amounted to EUR 63 million, down 47% from EUR 119 million in 2015. This sharp drop results from the decrease in management fees, including fixed and variable charges, fees for the overlay mandate, securities expenses and technical charges on VAT, which amounted to EUR 39.2 million, compared with EUR 95.4 million in 2015. Indeed, although fixed costs rose a little, variable costs recorded in 2016 were down sharply under the combined influence of lower commissions being paid in 2016, and the reversal of a provision booked in 2015, which ultimately exceeded the commission paid. 2016 also saw an increase in the cost of the overlay mandate (+59%) due to the higher level of cash management and the announcement of an increase in the service provider’s prices. In total, management fees (EUR 39.2 million out of operating costs of EUR 63 million) accounted for 62% of all costs, compared with 80% in 2015 (EUR 95.4 million out of EUR 119 million). Custody fees amounted to around EUR 10 million over the year.

Lastly, other costs, within a restrictive budget (payroll, IT and other overheads), were down to EUR 14.0 million, from EUR 14.4 million in 2015. They equate to less than four basis points of the assets under management.

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