ETF Due Diligence Series: Analysing Amundi


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The growing popularity of exchange-traded funds means that investors now have tens of thousands of trackers to choose from. But where to start? Considerations including assets under management, tracking error, charges and the track record of the fund group. But with hundreds of ETF all promising to track the same market, picking a fund can seem an impossible task.

In a new series, Morningstar analysts take an in-depth look at some of the biggest ETF providers in the market. This week we investigate Amundi, the fourth-largest ETF provider in Europe.

Amundi can rightly lay claim to being one of the trailblazers of the European ETF market, having launched its first ETF back in 2001. Formerly a staunch advocate of synthetic replication – where an ETF uses derivatives to replicate an index – Amundi has now embraced a more pragmatic approach in its replication strategy, with the choice of method determined on a fund-by-fund basis depending on feasibility, cost, and tracking efficiency. Amundi has developed a distribution structure that allows investment in a fund through an ETF or a non-listed share class. We view this positively, as it provides an option to investors who do not have access to ETFs while bringing scale and efficiency to the business.

This in turn can help bring down cost to investors. Nearly all the firm’s new index funds are offered in both ETF and non-listed share classes by default. Amundi benefits from one of the most experienced and stable portfolio management teams in the European ETF market. With no borrower indemnification – investors are not offered indemnification in the event of borrower default – and a potential conflict of interest with the lending agent, the securities-lending programme could certainly be improved, especially as the number of ETFs engaged in the programme has increased over the past year. We value Amundi’s strong environmental, social, and governance and investment stewardship capabilities, underpinned by a large team of ESG analysts and a long-running internal ESG rating system. However, when it comes to expressing its ESG views, Amundi currently focuses more on its active strategies than passive strategies.

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First ETFs Launched in 2001

Amundi ETF is part of a dedicated business line within Amundi Asset Management. Resulting from the merger of Crédit Agricole and Société Générale, Amundi became a publicly listed company in December 2015. Crédit Agricole Group remains the main shareholder, with a 75% stake. The first Amundi ETFs were launched in 2001, but it wasn’t until 2008 that Amundi placed the ETF activity at the centre of its strategic development. In July 2017, the firm completed the acquisition of Pioneer Investments. Currently, Amundi is the largest asset manager headquartered in Europe, with €1.4 trillion in assets under management as of the end of 2018.

Amundi ETF offers close to 180 ETFs covering a broad range of equity and fixed-income exposures. In 2016, the firm began to expand its physically replicated ETF line-up. The number of physical ETFs has since grown to 47 from three, representing 26% of the ETF range by number, and one fifth by assets. All Amundi ETFs are UCITS-compliant. Amundi ETFs are managed by the ETF, indexing, and smart-beta business team headed by Laurent Trottier. The team currently consists of 16 people split by asset class. The equity management team, headed by Lionel Brafman, is composed of nine portfolio managers in Paris and three in Tokyo. The fixed-income portfolio management team is headed by Stephanie Pless and consists of four portfolio managers in Paris.

Corporate Governance and Engagement

Amundi has a dedicated corporate-governance team made up of five people in Paris and one in Tokyo. The team has responsibility for coordinating voting and engagement-related tasks with the ESG analysis team, which consists of 12 analysts in Paris and one in Tokyo.

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The number of company engagements over the past three years has ranged between 450 and 650 annually. Amundi carries out three types of engagement: related to annual general meeting voting, engagements for influence, and to gather information for ESG rating purposes. Amundi prefers one-to-one engagement with investee companies. But collaborative initiatives can be carried out in certain circumstances, often in situations where Amundi’s holding in a company is too small or when a prior individual engagement has been unsuccessful. Amundi contributes to the development of regulator policy with other asset managers and participates in industry events and relevant working groups.

 

You can find the full report in “A Guided Tour of the European ETF Marketplace” here.

Read our analysis of: iShares, Lyxor, Vanguard, Invesco, UBSXtrackers

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person’s sole basis for making an investment decision. Please contact your financial professional before making an investment decision.



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