Amundi introduces suite of ‘Prime’ ETFs at 5bps

Mar 12th, 2019 | By | Category: Alternatives / Multi-Asset

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Amundi has launched a suite of nine ultra-low-cost ETFs – branded ‘Prime’ – on Xetra and London Stock Exchange that have been designed to provide investors with core portfolio exposures.

Amundi introduces low-cost suite of core ETFs

Amundi’s suite of ‘prime’ ETFs come with a flat fee of just 0.05%.

Consisting of five equity and four fixed income ETFs, each fund is directly replicated, linked to a Solactive index and comes with a total expense ratio (TER) of just 0.05%.

The equity ETFs provide market-cap-weighted exposure to Europe, the eurozone, Japan, the US, and developed markets globally.

They are the Amundi Prime Europe UCITS ETF; the Amundi Prime Eurozone UCITS ETF; the Amundi Prime Japan UCITS ETF; the Amundi Prime USA UCITS ETF; and the Amundi Prime Global UCITS ETF.

Four of the five ETFs track indices from Solactive’s Global Benchmark Series which targets large- and mid-cap representation across their respective markets.

The eurozone fund, however, is linked to the Solactive Euro 50 Index, which represents large-cap performance across 10 developed eurozone markets and is similar to the better known Euro Stoxx 50 Index.

On the fixed income side, the ETFs target either corporate or government bonds rated investment grade from Europe, the US, or worldwide. Within each index, bonds are weighted by market value outstanding.

The Amundi Prime Euro Corporates UCITS ETF tracks euro-denominated corporate bonds with at least one year to maturity from companies globally. Each issue must have at least €500 million outstanding to be eligible for inclusion.

The Amundi Prime Euro Govies UCITS ETF provides access to euro-denominated government bonds from issuers across the eurozone. Bonds must have at least one year to maturity and €1.5 billion outstanding to be eligible.

The Amundi Prime Global Govies UCITS ETF provides exposure to government bonds from developed market countries issued in their local currency. Bonds must have a minimum time to maturity of one year and an outstanding amount of 1.5bn of their local currency (adjusted higher for Japan, Denmark, and Sweden) to be eligible.

The Amundi Prime US Treasury UCITS ETF provides exposure to US dollar-denominated government bonds from the US government with a maturity of at least one year and an amount outstanding of at least $250m.

Fannie Wurtz, Head of Amundi ETF, Indexing and Smart Beta, commented, “Amundi’s ETF product development strategy has always been based on our constant dialogue with clients who are increasingly looking to include ETFs in their investment solutions. We are happy to partner with Solactive for this launch, and we are confident that Amundi Prime ETF will meet investors’ needs for cost-efficiency, simplicity, and transparency.”

“This has been a very huge project for us, and we feel honoured to act as Amundi’s index provider of choice for this groundbreaking new range,” added Steffen Scheuble, CEO of Solactive. “The development of the ETF series displays Amundi’s and Solactive’s kindred entrepreneurial spirit, always pushing boundaries to provide agile and disruptive products and services while adapting quickly to ever-evolving market conditions.”

Ultra-low-cost ETFs, often branded ‘core’ by providers, have experienced strong inflows in recent years as investors and advisors have sought to reduce the drag of fees on portfolio performance. And demand for such products shows no sign of abating.

A recent research note from BlackRock, the asset manager behind the iShares brand of ETFs, forecast that ETF and index fund holdings at the core of portfolios is set to increase from around 10% today to 50% and potentially beyond.

Many of the larger providers are jockeying amongst themselves to capture a share this action.

BlackRock recently expanded its core ETF range with a suite of ESG-focused funds, and Lyxor, a Paris-headquartered neighbour and competitor to Amundi, rolled out its own low cost core line-up in March 2018 with some products costing as little as 0.04%, although the majority of funds come with TERs of around 0.07%.

With a flat fee of 0.05% across the suite, Amundi has positioned itself confidently at the heart this tussle.

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