Amundi expects retail investors to drive ‘massive' ETF growth in Asia and Europe
'My personal belief is that ETF growth is at an inflection point which is accelerating more than decelerating. I have very high ambitions… And with the element of deglobalisation, there is value in being a European asset manager.'
He was speaking to journalists on the sidelines of Amundi's World Investment Forum in Paris last month.
Amundi last year achieved record assets under management (AUM) of about 2.2 trillion euros (S$3.4 trillion), up 10 per cent from 2023. Based on results for 2024, inflows were strong due to ETFs and Asia segments.
Its ETF assets rose 30 per cent to 268 billion euros in that period, driven by record net inflows of more than 27.8 billion euros, including 10.5 billion euros in the fourth quarter alone.
Sorel said rapid and 'massive' adoption of ETFs by retail investors marks a turning point for the vehicle. 'My 'guesstimate' is retail adoption is between 20 per cent and 30 per cent of flows in Europe. This was a non-existent segment five years ago.'
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He added: 'More and more, we're seeing a new generation of investors come into the market. And I think this will happen even faster in Asia, with all the digital platforms and online brokers developing massively (there).'
Rapid wealth creation in the region is also a tailwind for ETFs, as is the urgent need for retirement savings. Fannie Wurtz, Amundi's Asia chair, said wealth represents a 'US$100 trillion opportunity', and wealth levels in Asia are rising at a more rapid clip than elsewhere.
'Digital is already here. A third of savings in Asia is done through digital channels, and will continue to grow… ETF as a listed instrument is digitally compatible, and digital acceleration will help market access.'
Retirement solutions
On the retirement savings gap, she said: 'In Asia, we see more regulation to help the adoption of instruments to ensure the right retirement solutions, given the gaps. If we look worldwide, the proportion of people aged 65 and above is 10 per cent today; it will be 20 to 25 per cent by 2050. There will be massive savings needs.'
Sorel said observers had argued that the strong take-up of ETFs last year was because the vehicle offered a convenient and easy way to participate in the US bull market. But strong inflows in Europe have continued this year despite unease over tariffs and economic growth.
'This year, we're under way to the best year ever, with 60 per cent more assets than last year. We really see this inflection as one with exponential growth... Ten years ago, ETFs were used for niche exposure. Now, ETFs and indexing are core, and even used as an active tactical bet. If you take the second week of April when markets were extremely volatile, having the right vehicle to place your order midday is really changing the game,' he said.
Among Asian institutional investors, demand for ETFs which are domiciled in Europe and set up as Undertakings for the Collective Investment of Transferable Securities (Ucits) funds is also rising, he said.
Compared to a US-domiciled fund, Ucits funds offer non-US investors tax advantages, including a lower withholding tax on dividends as well as tax-free income from bonds. In addition, they are not subject to American estate tax.
Sorel said expansion in Asia is a priority for Amundi, likely through a direct business or joint ventures. The asset manager's AUM in Asia rose 17 per cent year on year to 469 billion euros in 2024, thanks to inflows of more than 28 billion euros.
Amundi has partnered Standard Chartered Bank, which launched the CIO Signature Funds in 11 countries in Asia, the Middle East and Africa. AUM in the funds reached two billion euros last year. The funds comprise multi-asset and ETF portfolios reflecting the views of the bank's chief investment office.
Amundi is also innovating to ensure its ETFs are front-of-mind for asset allocators and savers. It has, for instance, rolled out a mega-cap ETF tracking the MSCI USA Mega Cap Select Index. It has also launched an ex-mega cap USA ETF, replicating the MSCI Index of the same name, and rolled out an equal-weight S&P 500 ETF.
For retirement savers in Europe, it launched multi-asset life-cycle ETFs which progressively reduce equities exposure in favour of fixed income over the long term, with a low management fee of 0.18 per cent.
Deglobalisation an opportunity
Sorel believes deglobalisation is an opportunity for Amundi to differentiate itself through its climate commitments, in comparison with US managers which have retreated from climate as well as environmental, social and governance investing.
'In my trip to Asia, I was surprised to find that climate is a key concern. US asset managers are not engaging in climate anymore, but it's still central to what we do,' he said.
Global ETF assets rose by a record 27 per cent to reach US$14.6 trillion as at end-December 2024. A PwC survey of ETF managers and service providers found that two-thirds of respondents expect AUM in global ETFs to reach US$26 trillion by 2029, suggesting a compound annual growth rate (CAGR) of 15 per cent over the next five years.
But a third of respondents were even more optimistic; they expect the AUM to more than double to US$30 trillion by 2029, a CAGR of more than 18.4 per cent.
'Alongside ETFs' trademark liquidity, transparency and affordability, the ever-increasing choice and popularity of ETF products mean that fund allocations to ETFs will continue to grow,' said PwC.
The firm also said that one of the biggest drivers is the 'great wealth transfer' of some US$68 trillion from baby boomers to younger generations over the next decade.
'The popularity of ETFs among young people means that ETF managers are well-positioned to capture a sizeable share of this unfolding market. But the resulting lowering of the average age of ETF investors is accelerating a generational shift in expectations, as ETF managers compete for customers who've become accustomed to high levels of tech-enabled engagement, experience and personalisation.'
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