Amundi’s 20 choices for European equity
Amundi’s European equity fund selection lists 20 funds through a strict process.
At Amundi, the European equity fund selection is driven by senior analyst Bruno Veillet-Lavallée who is also head of Multimanagement Investment Solutions.
The buy list retains 20 Ucits funds for all networks of the company. Over €20bn of assets are managed under multimanagement by Amundi. External European equity funds picked by the firm account for €3.5bn-€4bn of AUM.
“As our investors can be retail or institutional, the 20 European equity funds forming our list guarantee a sufficient granularity level by covering any style, cap or alpha expectations. Our selection sometimes includes country or regional funds,” says Veillet-Lavallée.
The search for funds completing each other in order to remove the beta and keep the alpha prevails as a goal.
Geographical constraints are not part of the search, and at least two American managers running European equity funds are registered on the buy list. Nevertheless, products selected must reach a certain size, Veillet-Lavallée adds.
“I cannot propose a €20m fund to the buy list. There is no point for us to manage rarity. It would be contrary to our principles.”
Meanwhile, the process finds a number of large sized funds standing out from the competition.
Veillet-Lavallée also spots most of the European equity fund offering focus either on small or large cap equities. He says he once led specific research on pure European mid cap equity funds, but decided he could not build a peer group in the segment owing to the lack of products.
“Mid cap equities can be found in all cap funds with a huge mid cap bias or in ‘smid’ – small mid cap – equity funds,” he says, pointing to differences between US and European equity markets.
“The US equity market is clearly segmented. A value manager will not look for growth and vice versa. You would not find mid caps in small cap funds. We stress the opposite in Europe as managers have a higher degree of flexibility in their investments. We are seeking an allweather fund more than in the US because the economic culture is different. The role clients assign us is primarily to preserve their assets,” he says.
The firm’s European equity funds buy list excludes passive ETFs, but gives room to smart beta.
“Systematic fund managers bring a diversification which has no correlation with those of active managers. Fundamental managers often make the same bets.”
“Back to 2010-2011, there was a quality growth round for everyone in Europe. Quality growth was ‘the place to be’. We found the same stocks in all portfolios apart from those managed by contrarian managers,” Veillet-Lavallée says.
In addition to quantitative and qualitative analysis, Amundi conducts operational due diligence on the manager’s environment. Several factors are monitored such as the manager’s risk processes, orders and trading execution, and the financial stability of the company.
Following the due diligence, the firm establishes a score.
Amundi’s senior analyst pinpoints crowded trades as a key current challenge in fund selection.
“To some extent, fund selectors pick the same funds. There comes a moment when you have to exit a fund performing well because its capacity to generate alpha has been affected. You have to find another fund, a fresh one,” he explains.
Veillet-Lavallée also deplores the approach that all stakes are put in passive strategies as soon as active multimanagement underperforms, and that all work then relies on allocation. “It is too bad we cannot exploit the failures of the European equity market,” he says.
Bruno Veillet-Lavallée is responsible for providing multi-management advisory to Amundi group’s portfolio managers. He is also senior analyst covering Europe and Euro equities.
Prior to joining Amundi during the merger between Societe Generale AM and Crédit Agricole AM in 2010, Veillet-Lavallée spent 11 years at the balanced management division of SGAM where he successively held roles as product specialist, portfolio manager and head of Multimanagement Analysis.
He started his career in 1987 at Societe Generale as subsidiaries supervisor before holding various positions in the marketing department such as head of Product Development.
Veillet-Lavallée graduated from Edhec in 1987.