Europe’s Biggest Fund Manager Does More With Less

(Bloomberg Opinion) -- Size alone wasn’t enough to shield Amundi SA from the market turmoil that prompted investors to pull money from the asset management industry as a whole in the fourth quarter. But bulk is helping Europe’s biggest fund manager weather the storm better than its competitors.

Net outflows of 6.5 billion euros ($7.4 billion) in the final three months of last year were dwarfed by almost 44 billion euros of market losses as stock markets sank around the world, leaving Amundi’s assets under management little-changed at the end of 2018 at 1.4 trillion euros.

Europe’s Biggest Fund Manager Does More With Less

Total inflows for the year of 42 billion euros compare favorably with Amundi’s competitors. DWS Group GmbH, the German asset manager spun out of Deutsche Bank AG last year, saw 22 billion euros depart last year. At Standard Life Aberdeen Plc, 16.6 billion pounds ($21.4 billion) left the building in the first half alone.

Amundi Chief Executive Officer Yves Perrier still fell short of his pledge to gather at least 50 billion euros of extra assets under management each year — but investors have good reason to overlook that for now. Fourth-quarter adjusted net income of 225 million euros beat the consensus analyst estimate by almost 9 percent, and the the money manager boosted its dividend by 16 percent. That helped to drive the shares 4 percent higher in early trading on Wednesday, although this year’s rally of 15 percent still has a way to go to recoup 2018’s 37 percent decline.

Amundi’s breadth of business is helping. It attracted a net 14 billion euros into its passive and smart beta products, growing those assets by 5.6 percent in the year to 95 billion euros. Its exchange-traded funds business manages 38.6 billion euros, which it says makes it the fourth-biggest player in Europe. 

The firm’s stronger grip on costs than its competitors is helping, too. Its cost-income ratio shrank to 51.5 percent at the end of 2018, down from 52.4 percent at the end of the previous year, as it managed to squeeze additional savings out of its 2017 purchase of Milan-based Pioneer Investments. Perrier’s thriftiness compares with a 71 percent cost-income ratio at DWS and one of more than 69 percent at Standard Life Aberdeen.

Amundi’s Asian assets posted the best percentage increase of any region last year, boosting their contribution to 14 percent of the business from 12.4 percent at the end of 2017. At DWS, by contrast, only about 5 percent of its assets are in Asia.

Europe’s Biggest Fund Manager Does More With Less

Perrier told the Financial Times in October 2015 that his aim was to “make Asia into a second domestic market.” But with 80 percent of Amundi’s assets still coming from Europe, it will still need to build a better geographical balance if it is to achieve truly global status.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."

©2019 Bloomberg L.P.