Amundi Asset Management, the investment group co-owned by Crédit Agricole and Société Générale, is reviewing the fees it charges for some of its absolute return UCITS funds. The review comes amid growing investor interest in absolute return funds given the current backdrop of uncertain markets. 

News of the fee review came during a press briefing about Amudi’s revamped range of VaR or Value at Risk products distributed in UCITS. Since its first VaR fund launch in 2001, Amundi has developed a range of absolute return funds covering bonds, currencies, equities and volatility. Management fees on some of the funds range from 50 to 80 basis points with incentive fees of 30% on the performance above the EONIA (or overnight Euribor rate) plus a hurdle of 1-2%.

“We are looking at the market and thinking of how to have a competitive pricing in the market,” said Laurent Crosnier, CEO and chief investment officer of Amundi’s operation in London. He added that the review is likely to see Amundi change the balance of the performance and management fees on some of its absolute return fund products. 

Amundi Fund is a Luxembourg SICAV with a comprehensive range of sub-funds distributed in 23 countries, primarily in Europe, but also in Asia and South America. The assets under management are €15.2 billion in the sub-funds, including €14 billion in absolute return funds. The entire group is managing over €700 billion.

Since the financial crisis Amundi has worked to improve liquidity provisions even though it didn’t gate investors during 2008-09. One innovation is a weighted average liquidity factor or WALF that is a real time indicator estimating the time required to liquidate 10% of a given portfolio.

“When there were widespread outflows from absolute return products during the financial crisis, our investment philosophy ensured that our VaR products were among the ones to provide daily liquidity,” said Crosnier. “Since July 2010 we have strengthened our VaR range by further improving the investment process and tightening risk control.”

Amundi also updated its investment outlook. Though the Crosnier and his team acknowledged that the Greek financial crisis was unsustainable, they argued that there are still a number of outcomes for the country’s sovereign debt and for the euro.

“We are in the business of taking controlled risk,” said Crosnier. “We are constantly searching for sources of well rewarded risk.” 

On investment positions, Amundi’s outlook is to be short the Yen versus the dollar and short the Canadian dollar versus the New Zealand dollar. Amundi is also forecasting a flattening of bond yields denominated in the dollar, sterling and the euro, with outperformance on the long end as short term rates rise. The house view is also positive on emerging market debt, currencies and sovereign credits.