When Valérie Baudson was announced as chief executive of Amundi in May 2021, it was a boom time for the sector. Asset managers were riding the wave of rising equity markets and a broadly positive outlook.
The honeymoon was short-lived. In 2022, the European asset management sector experienced one of its worst years on record. Investors pulled €130bn from funds, while revenue and profit across the sector was hit by a worsening economic environment. And the industry is not yet out of the woods.
“The new economic shift we are in and the fact we see inflation staying, rake hikes, volatility — client aversion has been and still is high,” Baudson says. “It won’t be a fantastic year for the industry. I expect 2024 probably to be a year that will not be an incredibly positive one. We need to be realistic.”
Despite the challenging market backdrop, Europe’s largest asset manager has weathered the storm better than most of its rivals: third-quarter results showed it pulled in almost €14bn of new money in the three months to the end of September. That bucked the wider trend of outflows across the industry and was in contrast to the almost €13bn investors pulled from Amundi during the same period in 2022.
Assets under management were also buoyed to €1.96tn, although this remains below the all-time high of €2.06tn reached at the end of 2021.
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Amundi has come a long way since its formation in 2010 from the merger of Crédit Agricole and Societe Generale’s asset management businesses. It now has more than 1,000 institutional clients and 100 million retail investors across the 36 countries in which it operates. Much of the growth has come from acquisitions. That includes its landmark purchase of Pioneer Investments from UniCredit in 2016, which gave it significant distribution muscle.
Amundi’s acquisition of Lyxor two years ago was Baudson’s “dream deal”, she says. Figures from data provider ETFGI show it cemented her firm’s position as Europe’s second largest ETF provider, with more than $200bn invested.
Baudson oversaw the formation of Amundi’s ETF business from scratch and maintains a keen interest in the growth of the European market. Research conducted by BlackRock and website extraETF shows ETFs are beginning to experience an uptick in adoption among retail investors. They now predict there will be 32 million individual ETF saving plans in Europe by 2028 — a 321% increase from around 7.6 million at the end of September.
“The ETF business is still really only an institutional business in Europe, which means there is huge growth ahead of us,” says Baudson. “It will come because of regulation, cost efficiency and digitalisation. I was convinced of that 10 years ago and I’m still absolutely convinced.”
Merger mania
She jokes she could write a book on how to merge asset management companies, and indicates Amundi has not stopped the search for potential deal opportunities.
“I see the current environment, which is obviously less positive than it was five years ago, as a potential opportunity for the future,” she says. “We only look at things that accelerate our organic growth.”
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Technology is one area Baudson identifies as providing opportunities, now that Amundi has a foothold in this space. Amundi Technology launched in 2021 and now has about 900 people spread across Dublin and Paris. It posted a 13% increase in revenue during the third quarter compared with the same period in 2022.
The firm offers portfolio management alongside advisory platform and savings software through its Alto platform. This is widely regarded as a direct competitor to Aladdin — BlackRock’s platform for servicing other asset managers, pension funds and insurance companies.
Amundi had been developing its own technology over more than decade, and Baudson says it “would have been stupid” not to build on that experience.
“We’re not doing it because it is fashionable”, says Baudson. “Our revenues have increased and we know we can make it.”
Further afield
Business is also booming for Amundi outside Europe. Asia now accounts for about €390bn of its assets under management. It has also established joint ventures in China. But Baudson says “the real diamond” is a long-standing partnership with State Bank of India. This goes back to 2004, when Societe Generale Asset Management acquired a stake in the bank.
“Both these markets are fantastic. These are huge countries and are very under-invested, when you compare the percentage of savings to GDP,” she explains. “The growth potential is incredible and the middle class is growing in both countries. Retirement solutions are going to become incredibly important.”
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When it comes to ESG, Baudson is confident the continued outflows posted by sustainable funds are not a sign that the theme is running out of steam. The EU’s Sustainable Finance Disclosure Regulation came into effect in 2022. That introduced the Articles 6, 8 and 9 classifications for all investment products sold in the bloc. Article 6 funds are the least sustainable, Article 9 the most.
Amundi has the largest amount of assets invested in Article 8 funds, according to Morningstar. This category continues to bleed money, with investors withdrawing €20.5bn from Article 8 funds in the third quarter, having pulled €21.5bn during Q2. Meanwhile, Article 9 funds attracted €1.4bn during Q3 — a new low for them.
New money flooded into sustainable funds during the Covid pandemic, reaching a record high in 2021. But Baudson appears unfazed by the persistent outflows and the increased political and regulatory scrutiny that have hit ESG funds lately. Inflows have certainly not hit a peak, she says
“Institutional clients are extremely demanding. It is true in Europe and is more and more true in Asia,” she says.
Instead, these “ups and downs” are a good sign, she argues. “It means it has become real. When it becomes real, it becomes hard.”
CV
Born
1971
Education
1992-95
Master’s in Finance, HEC Paris
Career
2021-present
CEO, Amundi
2007-21
Various roles including CEO of ETF, indexing and smart beta, Amundi
2000-07
Various roles including head of marketing, Cheuvreux
1995-99
International audit manager, Banque Indosuez
To contact the author of this story with feedback or news, email David Ricketts
