Last year Amundi completed its merger with Pioneer Investments to become Europe’s largest stand-alone investment house.
This was followed by a reshuffling of leadership roles across both the asset management and fund selection operations.
Despite this corporate activity, one thing has remained constant for Amundi's Filippo Valvona, who looks after fund research and manager selection at the group's Italian arm.
‘We are in a fast-changing world, but the challenge for fund selectors is always the same: selecting funds which are able to generate consistent alpha,’ he says.
‘Digitalisation is a very disruptive theme in the market and we could see a big change in the way funds are distributed, in the same way that the music and book markets were shaken up.
‘I don’t think disruption is changing our job significantly, but we do need to adapt to this new environment.’
Valvona says one benefit of digitalisation selectors can capitalise on is increased data.
‘We can collate all of the information on offer and this will give us a more up-to-date picture for particular stocks,’ he says.
However, as technology evolves and the stock market becomes ever-more crowded, Valvona is turning his attention to passive funds to fit specific purposes.
‘Passives should be seen as instruments that, in some circumstances, are very efficient. For example, if you want to implement a tactical asset allocation call using an ETF, you can take immediate market exposure correctly without the tracking error risks you have when buying a fund.
‘However, you have to be careful when selecting ETFs because you can’t always get the exposure you want.’
Valvona cites emerging market equity as an example of how an ETF can misrepresent the market.
‘Up until September 2017, if you had purchased an ETF tracking the FTSE Emerging Market index rather than the MSCI Emerging Market index you would have missed out on some key Chinese companies, such as Alibaba or Baidu, which are listed in the US. This is because its methodology excluded US-listed stocks and this could generate a huge difference of performance,’ he says.
‘A lot of people are going into passives, but they will not beat the benchmark that way, only an active fund manager can do that and really make a difference,’ Valvona adds.
This article originally appeared in Citywire Selector's, Selector 100. For more articles click here.