KUALA LUMPUR: Amundi Asset Management, Europe’s largest asset manager with assets under management (AUM) worth US$1 trillion (RM3.27 trillion), has high expectations for Asia as the region for the group’s next phase of growth.

The Paris-based firm, which is also the ninth largest asset manager in the world, sees potential in the region, in particular Southeast Asia. Currently, Asia makes up US$74 billion, or 7.4% of the company’s total AUM.

“We are optimistic about growth in Southeast Asia, which will be underpinned by healthy economic growth and surpluses accumulated by governments and institutions,” said Jenny Sofian, Amundi chief executive officer for Southeast Asia and Australia, in a phone interview with The Edge Financial Daily.

“The demographic structure in Asia, in particular, is very promising. There is a healthy workforce and statistics show that high net-worth individuals in the region are on the rise. Also, more people tend to plan for their retirement in Asia. [Hence], there is growth potential for savings and retirement investments.

“All in all, the conditions for wealth management are favourable,” she said.

The Amundi group aims to grow its AUM in Asia by US$26 billion to US$100 billion over the next five years, according to Sofian.

Amundi was formed in 2010 via a merger of the asset management businesses of French banking giants Société Générale and Crédit Agricole SA. Its clients range from group insurance companies (44%), institutional clients and third-party distributors (34%), to partner networks and employee savings (22%), with a wide network of clients in Europe.

The company’s speciality lies in fixed income. In 2013, about 70% of its global portfolio was invested in bonds and money market instruments. In contrast, only 13% of its portfolio was invested in equities.

“In portfolio management, you need diversification and a core strategy. With the differences in asset classes, fixed income forms an important part of that core in an individual or institutional portfolio,” said Sofian, adding that the asset management firm takes pride in its track record in fixed income management.

Amundi has been in Malaysia for six years, with four years of experience in sukuk offering. Recently, the company expanded its foothold in Malaysia by acquiring the fixed income business of local institutional fund manager KAF Fund Management Sdn Bhd. The acquisition makes it the largest foreign asset management firm in Malaysia with an AUM of US$4.3 billion.

“The acquisition makes sense as it ... completes the overall investment offerings we have in Malaysia,” said Sofian.

Amundi aims to bring its expertise in fixed income management to Malaysia as it foresees institutional investors’ need for yield and income.

“Malaysia as a market is almost on the same level as Singapore in terms of sophistication,” said Sofian. “However, in general, Malaysians are more comfortable with equity investments. But you simply cannot ignore fixed income in your portfolio, be it institutional or individual. Diversification is important, as all asset classes go through different cycles.”

The acquisition also means that Amundi has manoeuvred itself into a position to leverage on its expertise in sukuk issuance. Malaysia is currently the largest sukuk market in the world, with an estimated worth of US$163.5 billion.

“There is a growing trend in [investing in] Islamic products, especially in the Middle East and Brunei. This translates into a substantial demand for Islamic products. Malaysia has the necessary factors to grow [its] sukuk investment capabilities,” said Sofian.

Amundi does not plan to compete with the big boys of local Islamic players, said Sofian.

“In distribution, Amundi is not set up to compete with any local houses,” she said. “[Instead], we are looking for opportunities to work with them to offer investment solutions [to local investors] by leveraging on our global network and infrastructure, research capabilities and resources.”

On whether Amundi has already identified local financial institutions as potential partners, Sofian said: “We’re looking into it, but everything is still in its [initial stages].”

This article first appeared in The Edge Financial Daily, on May 2, 2014.