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Amundi AM may follow peers with China WFOE

Amundi Asset Management is considering setting up wholly foreign-owned enterprise (WFOE) in China and plans to launch more Hong Kong-domiciled funds, according to Zhong Xiaofeng, the firm’s CEO for North Asia.
Amundi AM may follow peers with China WFOE
Zhong Xiaofeng, Amundi
Zhong Xiaofeng, Amundi Asset Management

The French firm has already taken some steps into the China market. In 2007, it established a joint venture (JV) with the Agricultural Bank of China. In addition, in June last year, the Amundi HK New Generation Asia Pacific Equity Dividend Fund was approved for distribution on the mainland through the mutual recognition of funds (MRF) scheme.

Zhong, who has been the firm’s CEO for North Asia since 2012, said at a media briefing yesterday that the firm is now looking at the possibility of establishing a WFOE in China.

“If we were to set up a WFOE, which we are considering actively, the WFOE will be serving the joint venture and our partners. We are not creating a separate fund management house,” he said.

The firm’s JVs have been crucial to its business in Asia. Besides China, Amundi also has joint ventures in India and Korea. All three JVs were strong contributors of growth: Out of the total €27bn ($37.7bn) in net inflows from Asia, €25bn came from the JVs, according to the firm.

Total AUM sourced from North Asia, which comprises of Hong Kong, China, Taiwan and Korea, totalled €98.8bn as of the end of 2017, according to Zhong. The majority of business in North Asia is institutional, accounting for for 64% of total AUM, excluding those sourced from joint venture firms.

Overall, the firm managed €177.3bn in Asia as of the end of 2017. It aims to increase its AUM to €240bn over the next three years, Zhong said.

Hong Kong plans

The firm’s plans are to launch thematic funds in Hong Kong in the next 18 months and to launch more Hong Kong-domiciled funds.

The firm’s thematic fund range include the Global Ageing Planet Opportunities Fund and the Disruptive Opportunities Equities Fund. The latter was launched in December and has raised $80m from investors.

Amundi is also awaiting the launch of the ETF Connect, which will connect Hong Kong and China’s ETF markets, and is expected to launch later this year.

“In Hong Kong, we have listed two ETFs, and we will continue to develop our ETF range. Obviously, we will be very much interested in any development in the ETF Connect,” Zhong said.

The firm’s key distribution partners for its MRF fund in China are HSBC (China) and Ant Financial.

In terms of AUM coming from its third-party distributors, Taiwan represents a large chunk of the firm’s business. Zhong noted that the firm boosted its assets in Taiwan after the acquisition of Pioneer Investments. Now, the firm has 26 funds locally registered in Taiwan.

Source: Amundi Asset Management Note: AUM excludes those sourced from joint ventures

Three-year performance of Amundi AM’s MRF fund, the New Generation Asia Pacific Equity Dividend Fund, versus its benchmark and the sector average

Note: All fund, benchmark and sector NAVs have been converted to US dollars for comparison purposes

Part of the Mark Allen Group.