Amundi to move into Asia's competitive ETF marketplace
Amundi is to move into the ETF market in Asia for the first time and is looking for a senior business development executive to spearhead sales.
Amid a regional rise of passive investment, the French asset manager said it is aware of the fierce competition for ETF sales in the region, which could ensure a rough ride for any new entrant to the market.
The firm also plans to penetrate China’s market by using the qualified domestic institutional investor (QDII) scheme and the upcoming mutual recognition.
While Amundi is the fifth largest provider of exchange-traded funds in Europe, it lacks any ETF presence in Asia. Zhong Xiaofeng, chief executive for North Asia, acknowledged the firm’s lack of Asia ETF presence, but said Amundi is intent on establishing the Amundi ETF branding and replicating their European success.
“It will not be an easy ride as there are already many ETF providers here. We will leverage what has been developed in Europe and promote those ETFs, as well as develop ETFs listed and domiciled in Hong Kong,” he told AsianInvestor.
The senior salesperson which Amundi is looking to hire is expected to drive the new ETF business in Asia.
The firm is still working on which underlying indices to track and could not provide a specific date for the launches.
Amundi will be venturing into tough competition in the ETF space in Asia. Among the firms that have recently announced ETF plans are Cathay Financial (A-share ETF), Yuanta (commodity ETF), and Samsung (futures-based ETF). However, the prospect for flows still looks promising. According to an AsianInvestor readers survey, ETFs are predicted to be the most popular product for Asian investors in 2015.
In a further boost for passive products, last Thursday the Hong Kong government and the local pension authority published a report which is likely to lead to the introduction of low-cost and largely passive default funds. The report came after years of criticism over high fees charged on the city's MPF pension products.
Amundi will also be launching a mutual fund with an investment strategy focused on old-age care industries, as part of a push to grow its retail business. The fund, which will invest in old age-themed plays in developed countries, has been approved for distribution by Hong Kong’s Securities and Futures Commission.
Although Amundi's focus so far in Asia has been the institutional sector, Zhong said there was now a strong push to develop Amundi’s retail business in Asia. “Sovereign wealth funds are our main clients and we are also working on broadening the institutional clientele by extending to corporate and insurance,” he said. “In the same vein, we are also strengthening our development in the retail segment.”
Amundi’s brand is relatively new in the region, having been launched in 2010 from the merger of the asset management arms of Credit Agricole and Societe Generale. While it has gained traction in becoming known in the retail segment, it is still not on all the major retail banks’ fund platforms.
“We are now more known by the distributors. We have a steady plan and we know that retail is not an overnight business,” said Zhong.
“We still need to convince top distributors that we are here to stay and we can provide them with robust performing products. I think the distribution channel is the key.”
Amundi has less of a challenge in getting onto private banking platforms, by exploiting its global relationships. “Getting a breakthrough in the retail sector demands greater efforts. Retail banking distributors are demanding as it is the main distribution channel here,” Zhong said.
The major retail banks usually have their shelves full of fund products and new funds get through if there are gaps to fill or there is an attractive commercial arrangement, Zhong noted. He said that new players have to compete on product innovation and performance.
Zhong said it plans to incubate a popular fund so that the public can associate this with Amundi and help open doors to the shelves of major banks.
On China, the firm is looking at QDII and mutual recognition as the two major schemes to address.
“We will leverage our network and partnerships in China to tap the retail market through these programmes,” said Zhong. While Amundi presently has no direct distribution in China, it conducts distribution business through its fund management joint venture with Agricultural Bank of China.
Amundi is one of the bigger managers in Europe, with around $1 trillion in assets under management globally. Asia-sourced assets came in at $92.8 billion as of December 2014. It ranked only No 25 in the AsianInvestor top 100 fund firms in Asia Pacific by AUM in 2014.
Amundi has investment teams in Hong Kong and Singapore, and eight offices in Asia Pacific: Hong Kong, Beijing, Taipei, Singapore, Tokyo, Kuala Lumpur, Bangkok and Sydney.
It opened a Bangkok branch last year and added headcount in Malaysia as part of its build-out in Southeast Asia.