Where the flow splits, active bond funds still win

Every conversation about the shift into passive investing risks flattening a more interesting story underneath it.

Real money is still going into active fixed income, and in serious size, even as ETFs grab the growth headlines.

Amundi’s second quarter numbers

Amundi released its second quarter results on 31 July, and they give a useful window into that split. The French manager runs close to €2.6 trillion for more than 200 million investors globally.

That scale means its flow data reads less like one firm’s marketing and more like a broad sample of where advised and institutional money is actually moving.

The headline numbers: assets under management rose 14 per cent year-on-year to €2,581 billion. The firm took in €24.4 billion of net inflows in the quarter, on top of €56.4 billion for the half. Amundi says that half-year figure is a record for it.

Growth rate favours passive

The detail worth sitting with is how that money split between active and passive. ETFs and index solutions grew assets by 40 per cent year-on-year to €624 billion. That makes them easily the fastest-growing part of the business. They also pulled in €13.3 billion of new money in the quarter.

Active management, by contrast, grew assets by a comparatively modest 9.2 per cent. On growth rate alone, passive wins the argument.

Flows still favour active in fixed income

But look at where the actual flow dollars went. Active management still took in €8.7 billion in the quarter, almost all of it in fixed income.

Active bond funds alone added €10.1 billion, more than offsetting redemptions out of multi-asset and structured products. That is not a rounding error next to the €11.9 billion that went into ETFs and ETCs over the same three months.

Two of Amundi’s flagship active bond strategies, its Global Aggregate and Emerging Markets Bond funds, sit in the top decile of their category over one year. That kind of performance keeps redemptions from happening in the first place.

The pattern holds a broader lesson than one manager’s numbers. Passive is winning the growth-rate story for two reasons. It is compounding off a smaller base, and cost pressure keeps pushing flows there by default. But fixed income is different.

Dispersion between managers is wider there, and duration and credit calls matter more. Active is still attracting new money on the strength of results, not inertia.

The same split in Australia

The same split shows up locally. Betashares’ half-year review put the Australian ETF industry at $372 billion in funds under management after $30 billion of net flows for the six months to June.

Fixed income was the third most popular category at $4.7 billion, behind international and Australian equities. Passive still dominates those flows overall, at $27.5 billion against $2.4 billion for active.

But on performance, local active fixed income managers have a stronger case than their equity counterparts.

The latest SPIVA Australia scorecard has only 41 per cent of active fixed income funds underperforming their benchmark over one year, against 69 per cent of active equity funds. That is the third straight year active bond managers have beaten active equity managers on that measure.

AI enters trade execution

Two smaller details in the release are worth flagging for anyone watching where manager business models are heading.

Amundi’s execution arm, Amundi Intermediation, has started using AI to select execution strategies for orders. It is also using AI to support broker selection and request-for-proposal processes, on top of more established compliance use cases.

Trade execution quality is usually invisible to the end client, but it is becoming a place where technology spend shows up in performance.

Private markets edge into the platform

Separately, Amundi’s stake in private markets manager ICG made its first contribution to group earnings this quarter, a modest €12 million.

Against a group that reported €431 million of adjusted net income for the quarter, it barely moves the number.

But it is another sign that diversified manager platforms are absorbing private markets alongside active and passive public strategies. Private markets are not sitting apart from them as a separate allocation decision anymore.

What it means for portfolios

For portfolio construction conversations, the practical takeaway is that the active-versus-passive debate is less binary than the flow headlines suggest.

A client questioning why they are paying active fees for fixed income exposure has a live answer sitting in the numbers. The money is still going there because the funds are still outperforming, not because nobody has got round to switching yet.