Amundi to cut fees on hedge fund-style portfolios

LONDON: Amundi Asset Management plans to cut fees on its hedge-fund-style portfolios, in a rare sign that investors may be able to flex their muscles on charges in the wake of the credit crisis.

The France-based firm, which manages 14 billion euros ($20.1 billion) in absolute return strategies and which has around 690 billion euros in assets in total, said it was reviewing the fee structure on its VaR (value at risk) range of funds.

"We're currently rethinking the repricing of all our absolute return products," said Laurent Crosnier, CEO and CIO of Amundi London, at a journalist briefing on Wednesday.

"We are looking at the market, and where the competition and is and where the current pricing is ... We will come to the market soon with competitive pricing."

Amundi's VaR 2 and VaR 4 funds currently charge performance fees of 30 percent above a pre-determined target and annual management fees of between 0.3 percent and 1.1 percent.

Hedge funds typically charge a 2 percent annual fee and a 20 percent performance fee -- well above the level of most mutual funds.

Most hedge funds saw charges dip slightly during the credit crisis, but more recently many have been able to maintain them as investors have begun putting their cash back into the $2 trillion industry.

The VaR funds invest in assets such as stocks, government bonds and currencies, and target returns above cash while focusing on controlling risk.

Amundi also said its funds are betting the Japanese Yen will weaken against the dollar as the Federal Reserve raises interest rates, and said it prefers Scandinavian currencies to the euro.

"Scandinavia has a set of economies ... that seem to be well positioned in terms of fiscal problems relative to the euro zone, so it will be less difficult to raise interest rates," said Deputy Chief Investment Officer Markus Krygier.

The firm has positions in emerging market debt and currencies, including Venezuelan and Argentinean debt, and is also betting that the US yield curve will flatten.

"It feeds off our belief that we have passed the trough in the business cycle and that central banks will begin to raise interest rates," he said.

"That will begin to hurt shorter-dates maturities, but we're comfortable with the inflation outlook, which will begin to (show in longer-dated bonds)."

Copyright Reuters, 2011