French giant Amundi is revamping its Asian operations through job cuts and a reduction in fund products as part of a global reorganisation, following its acquisition of Pioneer Investments in July, AsianInvestor can reveal.
Vincent Mortier, Amundi’s deputy chief investment officer and its Asia ex-Japan supervisor, told AsianInvestor the fund manager was restructuring its Singapore and Hong Kong investment teams to focus on multi-asset and emerging markets (EMs).
“We are creating a more integrated investment team structure that will have global leadership while leveraging local market expertise,” he said.
The shift will result in job cuts in the Hong Kong and Singapore offices, including a few portfolio managers, he added. Amundi is understood to have begun internally announcing its strategic shift this week, informing some staff in Singapore on Thursday (October 12) that they would be released.
In June, It had also named Jack Lin, the former Asia Pacific head of Pioneer, as chief executive officer for South Asia. Xiaofeng Zhong was appointed chief executive for North Asia.
Mortier stressed that fewer than 5% of Amundi’s 1,398 Asia-based employees (including those working in local joint ventures) would be affected by the cuts. Amundi declined to provide figures on the number of investment professionals it employs in the region.
Pioneer has a 50-member team in Asia, including a 30-strong retail distribution team in Taiwan. Mortier said no changes would be made to the Taiwan team but did not elaborate on the fate of the employees elsewhere in the region. Pioneer doesn’t employ any portfolio managers based in Asia.
The Asia overhaul follows Amundi’s announcement in June that it would reorganise after the Pioneer merger.
The French fund manager is one of several to have embarked on a consolidation in the past two years, as active manager profits and assets under management come under pressure from generally falling client margins and the encroaching of cheap passive fund rivals.
Other recent deals include the mergers of Standard Life with Aberdeen Asset Management, Janus Capital with Henderson Global Investors and Natixis Global AM's acquisition of a stake in Australian firm Investors Mutual.
Mortier said the Pioneer acquisition had transformed the French giant into a truly international asset manager, with more business coming from outside its traditional stronghold of France. After completing the merger it has considered how best to rationalise costs, including which funds were not working, and identifying where it should profitably grow its business via existing or new funds.
“It is time to evolve, and acquiring Pioneer offered us the opportunity to bring in new ideas. Evolution was needed in Singapore and Hong Kong as portfolios were being managed in a traditional way,” said Mortier.
“Clients don’t care anymore about sector and country funds—they can invest in an ETF (exchange-traded fund) today,” he added. “It’s also difficult to outperform significantly on some of these sector/country funds.
“Today, clients … like strategies such as smart beta and low-volatility. We want to introduce these approaches to ‘modernise’ our funds.”
Mortier was keen to stress that Amundi has ambitious plans for its Asia business. “We have plans to increase AUM by 80% over the next three years,” he elaborated.
As part of its reorganisation, Amundi will combine some products it has that overlap with those of Pioneer.
“It’s better to have fewer bigger funds than many niche and smaller funds,” said Mortier.
Amundi currently offers around 50 funds (locally-, regionally- and Luxembourg-domiciled) to the region's investors.
Some of Amundi and Pioneer’s Luxembourg-domiciled funds have overlapping mandates, particularly in European fixed income and European equities. These are set to merge in 2018 and 2019.
Some country-specific funds in Asia will also come under review, Mortier said, but declined to provide further details. However, he admitted that some smaller funds have not performed well because they had not achieved the necessary critical AUM mass.
Amundi intends to base its global investment teams focused on emerging markets in London, Paris, Singapore and Hong Kong. All report to Mauro Ratto, head of emerging markets, who is based in London.
“Previously all the [Asia-based] teams were relatively independent and followed their own processes and solutions. We believe the new globally integrated structure will improve the performance of the funds offered to clients in the region,” said Mortier.
“While London will focus on both emerging market equities and fixed income products, Hong Kong will focus on emerging market equities while Singapore will be an emerging market fixed income hub," he added.
In addition to its investment groups in Singapore and Hong Kong, Amundi has teams in Malaysia, Korea, China and India within its local joint ventures. It is unclear whether they will be affected.
In June, the fund manager also announced two divisions focused on its major client segments: a retail client division (with more than €450 billion, or $532 billion, in assets under management) and an institutional and corporate clients division (managing AUM of around €860 billion).
Amundi’s alpha investment management platform supports equities, fixed income, emerging markets, and multi-asset products. It also has US expertise, which has expanded with the acquisition of Pioneer.
These management platforms will be distributed across six primary investment hubs: Paris, Boston, Dublin, London, Tokyo and Milan.
Amundi also has business lines focused on real and alternative assets, ETFs, indexing and smart beta, liquidity solutions, structured products, employee savings and retirement.