Speaking prior to its move to purchase Pioneer Investments, Chris Sloley spoke to Silvia Bocchiotti and Robert-Erich Polsterer about Amundi’s overhauled mixed asset allocation efforts.
Amundi has grand designs, on a scale that befits its overarching-reach. This is a group with operations in Paris, Madrid, Milan and Tokyo, with all the on-the-ground expertise that comes with those specific bases. But it wants to give its fund selection and advisory customers more.
The idea is to draw those regional strands together to create a more widely-informed house view. This can then be relayed back to clients within those four bases and tailored according to particular needs and individual locations. It should be a win-win, investors will still receive regional expertise, tempered with the advantage that comes from a broader perspective.
Charged with spearheading this new proposition – named the Multi-Asset Advisory Unit – are the firm’s head of advisory, Robert-Erich Polsterer, and Silvia Bocchiotti, who was moved across from LCL Banque Privée to set the ground rules for this brave new world.
From their headquarters in Paris, the duo will work with the multi-asset team, formally assembled on 1 April, to define asset allocation strategy, model portfolios through advisory and discretionary management, as well as open-ended investment solutions.
Back to the future
The size of the job in hand is not lost on Bocchiotti. ‘Amundi serves around 100 million retail clients in Europe and Asia,’ she says. ‘Over a number of years, the group has established a unique expertise through customising and implementing personalised open architecture.
‘This service is now being offered not only to well-established local retail networks, but also to top-tier private banks and international entities. It was a natural progression for me to take on this exciting opportunity to set up a new business line for advisory and fund selection.’
Showcased in these pages three years ago for her work as head of portfolio management at LCL, this latest development also resembles a closing of the loop in terms of Bocchiotti’s career.
‘Robert pointed out to me that the first advisory service established by this Amundi team was initially done for LCL and it was defined and implemented by me in 2006, when I was part of the Credit Agricole Asset Management Multi-Management team.
‘So, in a sense, I am coming back to where I started and this appointment is a homecoming of sorts for my international profile, following 20 years of experience within Credit Agricole,’ she says. ‘All the stars have aligned.’
The cap fits
Both Bocchiotti and Polsterer have suitably diverse backgrounds to spur on this international project. Bocchiotti was born in Venezuela to Hungarian and Italian parents before moving to Paris to study, while Polsterer is half-Austrian, half-Lebanese and was raised in France.
‘We are a truly international outfit and we are bringing a very international profile,’ laughs Bocchiotti. However, this is not the first time the pair have worked together - Polsterer was assigned to Bocchiotti’s team when he joined Amundi subsidiary Credit Agricole Asset Management in 2006.
‘When Robert joined the team that I was running, we sat near each other. The fund selection unit was providing a service to LCL when I moved, so we kept in contact and now have a long working relationship.’
Polsterer has just celebrated a decade with the group and believes this experience working together, along with his varied background, will be pivotal in coordinating the multi-asset advisory team’s work at both an overall and local level.
‘I have always been focused on this advisory and sector prism and have developed some model portfolios for my clients through that viewpoint,’ he says. ‘Now, we have clients thinking more about the management through a country allocation.
‘Within the new set-up, I will keep the analysis and asset allocator role but will be able to focus on more proactive business developments as well in key regions, such as Southeast Asia and the Middle East. The idea is to do it from a larger and stronger team.’
The duo are tight-lipped on how many assets this department will now oversee, but Bocchiotti says the aim is to become a world leader in what it can offer.
‘What I can say is that no asset manager has such an extensive offer combining products, services and tools. There are few global players in this area.
‘We really want to emphasise this capacity to respond to client needs, as there will be a more coordinated, global approach. It is about having different teams focused on various areas of expertise and we are investing into that as a priority.
‘With the current challenging environment of negative interest rates we are already seeing a clear interest for this type of service, particularly from Asian institutions,’ she says.
Multi-Asset Advisory in a nutshell
The 18-strong team will operate across Paris, Madrid, Milan and Tokyo, where Amundi has developed its presence over the past 20 years. The aim is to develop personalised investment operations targeting local and international asset managers. This will combine both advisory and discretionary management, as well as an open-ended investment focus.
Sales and marketing will be involved to ensure investors have timely responses to queries and changes to investment needs. Amundi says this could be through measures such as online or digital services, which could provide relevant and up-to-date information where required.
So international investors now want a bespoke response, but what exactly are they asking for? ‘We live in a complex world of low growth, low interest rates and geopolitical risk, so capital preservation is more important than ever,’ Bocchiotti says.
‘Bond yields have reached record lows in developed countries and equity valuations are pretty high. This has created demand for multi-asset and absolute return bond strategies, where duration can be managed actively.
‘Essentially, clients are asking for positive returns on an investment strategy where truly dynamic allocations can be implemented. There is much more interest for equity funds,’ she says.
Three years ago, Bocchiotti was in the midst of a move away from emerging markets but, following a strong start to the year and an increase in yield-hungry investors, the new unit is allocating increasing time and resources to this asset class.
‘Since the beginning of the year we have been very positive on emerging markets. They have gone through a long period of underperformance and now valuations are very attractive, especially as growth fundamentals have improved.
‘However, this may tail off because there is now the possibility of rate hikes. We have been increasing emerging market equity and debt exposure. Growth is looking positive and commodity and energy prices are also normalising,’ she says.
While they are keen to tap local asset managers, Polsterer name-checks some more well-known players who have been on their radar for a number of years and are set to play an important role in future developments.
‘Take for example the First Eagle Amundi International fund,’ he says. ‘It is in its 20th year working with Amundi and the strategy is celebrating its 37th anniversary. It’s an established, global equity fund with a strong value approach and capital protection, which adds value to our allocations.’
Alive to recent trends the team has also invested with CPR Silver Age, a demographics fund run by Citywire AA-rated Vafa Ahmadi and, until his recent move to Decalia, Clement Maclou. ‘This is an interesting strategy and one we bought into due to increased thematic interest from our side, as well as growing client demand.
‘It benefits from increased buying power among aging populations. It used to be focused on healthcare but very quickly the investment universe has grown to cover financial and leisure industries,’ he says.
Polsterer also highlights the BNY Mellon Insight Absolute Return fund, overseen by Citywire + rated Andrew Wickham and 20-year market veteran Peter Bentley. ‘The strategy takes advantage of three main performance drivers: govvies, credit and currency. We have known the managers for a long time and worked with them for a while,’ he says.
Steadfast on selection
Amundi’s ambitious shake-up will not redefine the company’s fundamental fund selection practices, Bocchiotti says. The selection process continues to be driven by quantitative screening followed by a qualitative analysis of fund managers.
‘The development of the new venture has preserved many of the relationships we had with asset managers. It is just more organised and more focused,’ she says.
While the first six months of the project were dominated by establishing a framework, Bocchiotti was back on the road in September meeting managers. ‘You have to know why and where you are invested, so fund manager meetings are the main focus now,’ she says.
Polsterer agrees that face-to-face meetings will be key but adds the local operations will also prove beneficial.
‘The team members also benefit from Amundi’s presence in the country where our clients are based, which is essential to the value proposition we have,’ he says. ‘It is a global reach with a local presence.’
With the multi-asset advisory unit now up-and-running, Polsterer and Bocchiotti expect to expand the process further in the future.
‘There is a real demand for this service but our focus will be on developing our business in Europe and in Asia. We will have opportunities to go to other regions and countries but this is our focus for now,’ Bocchiotti says.
These comments originally appeared in the October edition of Citywire Selector magazine.