you very much. Good morning to everybody and thank you for participating to this call, which is dedicated to our Q1 results. So I will start directly on these results to simply say as an introduction note that overall, there are good results with the production notes that overall there are good results with both in terms of activities and results, a very good level of activities, results that are in a significant growth compared to last year and an integration process with Pioneer, which is going well. So before going into the details of the number, just very quickly quick reminder on the market environment in which we worked for this Q1. As you all very well known this Q1 was a little bit more contrasted and complicated compared to what we had last year with a return of some volatility on the market and downturn on the equity market starting in February.
But in a nutshell, for our business, I would say that clearly compared to the end of 2017, we have a negative market environment, negative market impact. But still, if we compare to the beginning of 2017, we still have overall positive impact on the market compared to, again, to the Q1 of 2017. So this element having been reminded. Start with the activity. As I said, good level of activity on this Q1 with asset under management that reached €1,452,000,000 at the end of March, win by close to 2% compared to the end of the year due to strong inflows of close to €40,000,000,000 €39,800,000,000 to be precise, partially compensated by a negative market impact of €13,500,000,000 in line with what I just said about market environment compared to the end of 2017.
So to go a little bit more in detail regarding this activity. I think the main element is that it's a good level of inflows, but good quality with very well diversified sources of growth. First, in terms of client segments, you can observe that both our Retail division and our Institutional division posted strong inflows, close to €22,000,000,000 for retail and €18,000,000,000 for the international and corporate clients. If I dig again a little bit more in detail, regarding retail. Here again, what is interesting is that all our main client segments continue to positive growth.
1st, the French our historical French networks continued as we have seen over the last 18 months to be in a positive mode. €2,600,000,000 of inflows on the quarter, mainly in majority driven by long term assets and driven especially by the continued inflows within Unit Linked. So we continue to see that trend that we were expecting and started to be visible for the last 18 months, which is now flow within the life insurance to go more on the unit linked with higher margin for us and less on traditional euro contract. Regarding international networks, also very robust net inflows, driven mainly by Italy, just €2,700,000,000 of inflows in Italy, reflecting the success of the partnership with Uniqredi. The relationship is good, well established, a lot of work being done between the Amundi teams and the UniCredit teams to to develop the business, launch new initiatives and we can see the result with more than €2,000,000,000 inflows in Nizhine Credit Network in Italy and also some positive inflows with the Credit Agricole Network in Italy.
Regarding 3rd party distributors, here again, good level of inflows, home inflows, €4,000,000,000 a bit more than €4,000,000,000 on the quarter, driven by Europe and Asia. In Europe, especially Italy and Germany, very positive in Asia Japan, but also Taiwan, thanks to the ex Pioneer entity in Taiwan as well as in Hong Kong, for example. And finally, regarding our joint venture in Asia, very strong inflows, I would say I can say for this segment, exceptional level of inflows, €12,000,000,000 driven primarily by China, where we benefited, I would say, in addition to the continued level of inflows with the retail network from a mandate coming on our partner, NDC, which can be probably considered as a one off. But overall, the underlying trend is also very good. Regarding the institutional business, here again, solid inflows, EUR 18,000,000,000 so more than last year, EUR 16,000,000,000 but you have to remember that on the Q1 of 2017, we recorded an outflows of close to €7,000,000,000 due to determination of the mandate that was given to re internalization of the mandate that was given to us by the ECB.
So if you exclude this effect last year, slightly lower inflows, but good level of inflows. And what is interesting is that this year, on this Q1, the flows are more or less evenly split between treasury products that remain very attractive, especially for corporate clients, but we know they are more volatile. But also long term so even if it's between treasury assets and long term assets, which tend to be, of course, more stable. In terms of expertise, I would say, again, the key message is diversification and quality of inflows. In a nutshell, almost all our expertise business line posted positive on inflows and contributed to growth.
And if you look at the total inflows of €40,000,000,000 more or less almost evenly split, I would say, in for 4 elements. In terms of long term assets, €9,000,000,000 of inflows on active management, whether especially strong growth for example, our multi asset expertise or emerging market expertise. €7,000,000,000 for passive management that continue to grow very impressive growth, both in terms of ETF, where I think we were the 3rd collector in the European market for the Q1 and for, I would say, index funds and mandates or smart data strategy. So €9,000,000,000 active management excluding JVs €7,000,000,000 for passive management excluding JVs close to €12,000,000,000 of inflows coming from the JVs with, as I said, the contribution from China and close to €12,000,000,000 for treasury projects that continue to be very attractive and continue to growth on the Q1. But again, we know that this segment of activity tends to be more volatile.
Finally, in terms of activity, geographic approach. And here again, a good diversification in the source of growth with again close to 2 thirds of our growth coming from outside France. So continued development in all our geographies with, in particular, good inflows in Asia. Of course, there's a strong contribution from the JVs, but also, as I said good level of activities in Japan, Taiwan, Hong Kong, for example. And in Europe, especially Italy, a bit more than €4,000,000,000 of inflows just in Italy on this Q1 of the year.
So it gives us a picture for activity. Consequences in terms of results. 1st, just a word about the results, but I think it's important to remember that. So the bottom line, net result of €221,000,000 taking into account the integration cost, it's a growth of close to 55% compared to the Q1 of 2018. So reflecting, of course, integration of of Pioneer.
As you know, integration took place on the 3rd semester. So here, we have the full effect of ratio if you compare to the Q1 of the year, but also the strong growth momentum, I would say, in fact, growth momentum. If we come now to combine adjusted results, which I will develop a little bit more, and which allow us to make to analyze, I would say, the results on quarter comparable basis. Net results adjusted net results, so after before excluding integration cost and excluding the amortization of the distribution contract. So adjusted net result of €240,000,000 growing by 15% compared to the Q1 the combined numbers for the Q1 of 2017.
I will develop this element. Just maybe one element of comment, the net result of this quarter are slightly below the Q4 of 2017. But you have to remember that on the Q1 of 2017, we recorded exceptionally high level of performance fees, more than €80,000,000 And we also recorded a very high level of financial revenues due to some capital gains on minority participations. So if I come back to the analysis of the main component of the results, comparing them to of 2017, net asset management revenues or revenues generated by the activity are growing by close to 7%, 6 8%, in line or even a bit more than activity with net management fees increasing by close to 3% and performance fees by close to 100%. We recorded a very high level of performance fees, €52,000,000 on this Q1, which are due to the fact that good number of products with their anniversary date coming on the Q1 of 2018, posted very good performance on the last 12 months.
One word maybe about financial income, which are negative, which is relatively new for me if you compare to previous quarters and previous years. Reason is very simple. The first one is following the acquisition. We now incurred some interest charge due to the debt, senior and subordinated debt that we issued to finance partial lease acquisition. And the second element is that now since the beginning of the year, we are under IFRS 9, new accounting regulation, by which all the mark to market change in the valuation of our investment portfolio go through the P and L on this Q1, the market environment being negative, we have a slight decrease in the value, mark to market value of this portfolio.
And of course, this is not comparable to the Q1 of 2017, where we posted a significant financial income due to the fact that to prepare the acquisition of Pioneer, we started to release some investment portfolio that we had and realizing some capital gain that explains the good level we posted last year. So things are not comparable. Regarding cost, clearly, costs are, say, very well under control and decreasing by a bit more than 5% compared to the Q1 of 2017, with linking the implementation of cost synergies. I can't say a word about the integration of Degys opportunity to say a word about the integration of Pioneer, which is going very well. In terms of departure plans, already a bit more than 50% of the planned workforce reductions have already been completed at the end of March 2018.
The IT migrations are going as planned. We already have Germany and Czech Republic that migrate as a reminder, the idea here is to have all the Pioneer platforms to migrate to our 2 M and D platform with all of our plan, which is takes place between the end of 2017 and the 1st semester of 2019. So it is going as planned. As I said, Germany and Czech Republic already moved to the platform. The main other European platform are in the process of moving to the Yamundi platform and it will be done before the end of the year.
And the last one, which will be the U. S, will move to the platform on the form on the first half of twenty nineteen. So IT migration going smoothly. Most of the legal entities that have to be merged are already merged in Germany, Delhi, the U. S.
And so on. And it was reflected by what we discussed about the inflows within Incredi, cross selling of expertise started, especially with the integrated network. So overall, integration plan is going as scheduled. And so we are clearly in a position to confirm the amount of synergies, €150,000,000 of cost synergies, million of core synergies, but also to consider that they will be implemented faster than that we had previously expected. And we should expect to have, at the end of the year, already 60% of the total synergies accounted in our 2018 results.
So 60% instead of 40% previously planned. So this is clearly this good progress made in the integration plan. Actually, the explanation for the a significant cost reduction observed in the Q1 and the combination of revenue growing, cost decreasing, very logically, the costincome ratio is improving and reached 50.7% on the Q1. So it decreased by more than points compared to the Q1 of 2017. So finally on the results, level of revenues, costs that are down, the contribution from our JVs, which is also growing.
Tax charge average tax rate, which is slightly decreasing and which is mainly due to the impact of the tax reform in the U. S. As a consequence, again, a good progress in a good growth in our net result, 15 percent for the adjusted net results. So to conclude and before giving you the floor for you may have. The Q1 is clearly a good start for R and D with what is especially satisfactory is that even if some elements are not completely extrapolated couldn't be completely extrapolated.
I mentioned the inflows in the Chinese TV. We know that money market front are more volatile. But overall, what is interesting is that the momentum is good and driven by a very diversified set of segments expertise on regions. And the other element is integration is going very smoothly and faster than expected, which allow us to generate synergies as expected, but ahead of schedule. All of this allowing us to confirm our growth strategy and make us very confident on our ability to reach our medium term targets, even if the market environment is clearly less favorable as what it used to be over at what it was particular last year.
Okay. We can switch to Q and A. Can we switch to Q and A session?
Yes, sir, of course. Q1
Q1.
We can now take our First question from Arnaud Giblatt from Exane. Please go ahead.
Yes. Good morning. I've got three questions, please. Firstly, on the revenue margins, I know you don't disclose the different segments, but Assuming that institutional and insurance margins are fairly stable, it seems as though retail margins have dropped a fair amount versus H2 or even H1 levels. I think you were 47 on a pro form a basis in H2.
Could you give us maybe a bit more detail? What sort of maturities have you seen in structured products this quarter? Should we expect this to be a low level of maturities going forward? Or should we expect some sort of a recovery in retail margins? My second question is on the JV margins.
Actually, those are stepped up from 3 to 4 basis points. Could you elaborate maybe on what the driver of that is and whether it's sustainable? And finally, on costs, so a strong cost to income, clearly. I'm just wondering if there's any seasonality in the cost base. Should we be expecting a cost to pick up in absolute terms?
I know as well that you've earmarked some investment spend for ETFs. How are you getting on there? Is there any other areas where you're identifying investment potential? And yes, that's it. Thank you.
Okay. Thank you very much. So first, regarding margins, yes, as you already said it, we don't we're not in a position and we won't disclose the margins by segment on a quarterly basis. What I can say is that despite a good level of inflows that's true that our, I would say, our blended margins, if you exclude the Perfills, are slightly lower, very slightly, but slightly lower this quarter, I would say due to in addition to continued margin pressure, due to the fact that we have especially strong inflows on treasury or passive management, roll, which tends in average rather slightly lower margins. But I think what is important to remind is that only a single quarter, but not necessarily reflect the sustainable level of our blended margins, as you know and as you noticed.
Some elements of revenues are not totally linear along the year. For example, the ones generated by by guaranteed or structured product. And the second element is, and I think it's important to remind that we do not manage our business with a fee margin target. We said that in average, considering on the one hand, the improvement expected on the client mix side. On the other hand, continued pressures, we expect our blended global margins to stay more or less stable over the medium term and we still continue to do so.
But that said, again, we don't manage our business with a fee margin target. We propose the expertise and we try to gain as long as it's profitable any new business. So we are happy to have if we do have very strong inflows, for example, in lower margin products such as treasury or passive management, we are happy to do that as long as it contributes positively to the growth of our net result and even if the consequence could be quarter lower overall average margin. On your Second question regarding the JVs. So yes, we posted good they posted good significant growth on this quarter.
Yes, growth which has been higher than it was in terms of AUM. That said, it's just 1 quarter. And for some of the JVs this quarter is the end of the year end of their fiscal year. So sometimes in the end of the year, you have some accounting adjustments that have to be made. So it cannot be completely probably not completely extrapolated, but what I can say is overall, we these JVs are on a good track in terms of activity, but also in terms of margins and we should expect to see on the medium term the growth in, I'm chain net result, more or less in line with the growth in activity.
And what I can say that inflows we have posted in these JVs over recent period, are good quality, good margin inflows. And the third question was about cost. Just first about seasonality, there could be some seasonality, specifically on variable remuneration and they are they change in line more or less, more or less with the change in the operating profit before Raheembourg remuneration and would be adjusted in the end of the year, but no significant effect in terms of seasonality. Regarding investment, clearly, what over the recent quarters, we have been very focused on the integration and on delivering the synergies. We said that part of these synergies will be reinvested.
So far, we have not in reinvestment, but progressively over time and over the next quarter, we will be you will see some reinvestments, but it will be only a small part of synergies. And you can be and you we're quoting ETFs, clearly it's one area where we will invest to enforce our by the way, not that much capacity in terms of managing it yet, but more the distribution and of our selling capacities for this kind of expertise. But again, you can be confident that this reinvestment would be clearly monitored and very reasonable.
Thank you very much.
We can now take our next question from Chris Turner from Berenberg. Please go ahead.
Yes. Thank you and good morning. It's Chris Turner from Berenberg. Three questions as well, if I may. Firstly, French retail continues to accelerate.
Can you give us a feel for what proportion of those sales are wrapped up in unit linked policies? And what proportion are stand alone in terms of independent sales of mutual funds? And have you seen any acceleration in those stand alone mutual fund sales in response to the tax changes in France? Secondly, almost half of your flows this quarter went into passive funds, but I expect that has a strong bias towards the institutional channel. So can you give us a feel for how the active passive split looks in your retail channel, please?
And then finally, and sort of taking a step back a little bit, You expect to complete the European IT integration within, what, 18 months of the transaction closing. You're accelerating the recognition of cost efficiencies generally. Does that mean that some of the execution risk that people talk about in M and A in the asset management industry is overstated? Or is it more that when you just have a very scalable platform and therefore we should think of you as a kind of natural consolidator in the space? Thank you.
Thank you. First, regarding French Retail, you would say that the vast majority of inflows went through Unit Linked clearly. So you are mentioning potential impact of the tax reform in terms of inflows going outside, I would say, life insurance water. For the moment, we don't see this phenomenon, but it's a bit early. It's just the Q1 of I would say, implementation of the tax reform.
So it's a bit early to say that for the moment, it's still mainly driven by Unique Link. Regarding Passive Management, inflows are not only in this whole base, you have inflow and I think the majority of the inflow this quarter was in sales space, especially through inflows on some passive management mandate. But there are also flows with retail with 3rd party distributors for yes, mainly. Overall, clearly for I mean, the margins, especially when you talked about mandate, clearly depend on the I mean, the nature of the mandate and the size of the mandate. So I cannot give one answer and I cannot hope to disclose some elements.
But yes, overall, for, let's say, for a given size of a mandate for a given client, Passive Management's margins are lower than Active Management, probably the same in the retail space, ETF in average have lower margins at purely active retail funds. But again, they are a profitable business. And the last question was about integration and which is going smoothly, which is 2? And does it mean that, in fact, integration risk overall in the industry are overstated? Well, I would say that it really depends on the transaction, on the actors that are in place.
What we what I can comment is about what we are doing and some of the elements I can explain, the fact that integration is going well and there's absolutely no negative impact in terms of business. It's several elements, especially for the business part. The fact that we are talking here about business that are majority, especially in Pioneer side, not exclusivity, but majority driven by retail and especially by the activities with the unique credit network, which is, of course, sensible to change in terms of the teams that can manage the fund and performance and so on, but less than it is at some other business. That's one element. But the other elements are due to probably the experience that we have acquired at Amundi in the way to manage this kind of process and to the fact that our business model is very much adapted to be able to integrate new partners and new platforms.
When I say our model is the combination of a very dedicated approach when we are talking about sales, marketing, I would say, the interface with the client combined with a very mutualized integration approach when it comes to operational platform, IT platform that are conceived to be able to integrate new teams and new platform. So that's the second element. So the way we work on our results. There's a model, I would say, from the on our experience. And probably one third element is the fact that between Amundi and Pioneer and the Pioneer people and the Amundi people.
Of course, the cultures are different, the background are different, but I would say, they are not that different and very much close in terms of spirit on way to work. So the cultural fit is there and which also helps to manage an integration process in a smoothly manner.
That's very clear. Thank you.
We can now take our next question from Alex Quagnip from Nataxis. Please go ahead.
Yes. A few questions from my side as well. The first question is on the tax rate. I mean, it's come a little bit lower from the guidance you gave during the Investor Day, is there any change in the tax rate guidance? Number 2 is on the synergies.
I know you're a bit in advance of your plan. Is there any room to see a higher level of synergy by the end of 2020, I mean, something above the €130,000,000 In terms of contribution from the JVs, I'm not sure that I while it gets the underlying behind the strong growth we have, is that due to some kind of performance fees linked to in there? Or is there something or is it only due to the mix. I mean, can you just elaborate over there? Sorry if I missed the answer you gave before.
And the last question is basically on the cost to income guidance compared to what you have today and in Q4. For the time being, Amundi is trending somewhere around 50% to 51%, which is significantly below the 53% guidance, should we also think about revising a number over here? Thank you.
Okay. So first, the tax rate blending is around 29 0.5%, I think it's in line with what we said, 29%, 30%. Thanks to especially thanks to the tax change, the tax reforms in the U. S. What we to be clear and to remember, what we in our guidance, what we didn't take into account is a change in the tax rate in France, in the tax the corporate tax in France.
I know that there are tax decrease, which is scheduled, but for this year starting next year. But at the same time, there are some works being done and I think there's consultation, by the way, that has been launched by the Ministry of Finance regarding, I would say, the tax base. So let's see where all this come before taking into account any change in the tax site in France. But for the moment, 1st, for 2019, there's no tax change. And as we said 2 months ago, in our guidance going forward, we do not take into account any change in the fact treatment in France.
Regarding the synergies, no, as I said, we confirmed the amount of synergies, sales phasing is quicker than expected. We don't change the target. It's too early to say if we could or not, but we can say that we clearly confirm our target. Regarding the JV, so I understand the question to the contribution to the results and what is accounted in the line sorry, equity accounted entities. So there's an increase in the contribution of 50% compared to last year, but 50% is €4,000,000 So what I was just saying is that the underlying trend is good in term of activity and in term of margins.
But I wouldn't necessarily just basically multiplied by 4 what we have seen on the Q1. The reason is not that there are some exceptional elements such as performance. It's just again that this is for us, it's the Q1, but for in China and India, it's the end of the year and sometime at the end of the year. Can be some adjustments, it can be minor. But if you look at them, again, we're talking about €4,000,000 that can lead to a significant change in percentage.
But again, the trend is good. And going forward, we would rate contribution in line with activities. And in terms of last question was cost income, sorry, cost income. Let me again clarify what we said regarding the guidance. We said it should be below 53%.
It doesn't mean that we target 53%, it means that we should stay below 53% even in a lower environment. But clearly the direction is not to go up to 53%.
Understood. If I may have a request, could we have your asset under management in Italy on the quarterly basis as well as For France network. Thank you very much.
And Tariq, you account for what, 3 quarters of the assets. You have so in Italy, €178,000,000,000 of AUM at the end of March. Thank you very much. Total Italy, including institutional and so
We can now take our next question From Anil Sharma from Morgan Stanley. Please go ahead.
Hi, guys. I just had a couple of questions. So in terms of the JVs. I think you mentioned that there were some sort of exceptional flows in there. Just wondering how much that actually was that you think was kind of one off?
And then obviously for the last couple of quarters, you've been flagging that the profitability in the JVs was going to come through and the leverage would be better, which seems to be happening. But I'm just wondering, is there any more catch up to you in the coming quarters? So could there be slightly better operational leverage still to come? And then on the 3rd party distributors, just quite curious because you've had really strong growth there for that sort of 12, 18 months. And I think in this particular quarter, you said a lot of it came from Italy and Germany.
I'm just curious as to why you're not capturing those flows through the UniCredit network and why you're getting them through third parties. So if you could just help elaborate that for me. And what change in behavior you've seen from distributors following kind of MiFID II, if you've seen anything? Or has everything just kind of stayed the same? Thank you.
Okay. Regarding JV, so first question regarding the inflows, I guess the exceptional kind of exceptional part. I mean, the one off I mean, to be continued, but the mandates we got is around the €8,000,000,000 So that's a part that can be considered as, I would say, slightly exceptional. I'm not sure to have understood the question about the revenues on the JVs.
I was just saying, so obviously, if you look at the last 2 years, the JV assets have been growing very nicely, but the sort of amount that you capture has not grown as quickly. And I think in the last 6 to 12 months, you've been saying that should improve. It looks like this quarter, it has improved. But I'm just wondering, is there a bit more of a catch up So that actually the leverage will be even better as we look forward?
No. As I said, going forward, we should expect revenues going in line with activity. So we don't expect to see what we saw, as you mentioned, in the past with lower contribution contribution was lower than activity. That said, it all depends if as for Amundi, there are small Amundis, I would say, JV. So if I don't know, at some point, they gain very significant mandates or funds with a very high level of AUM, but lower fees and average, it would it could lower the average margin.
But again, what is important is the bottom line. Regarding 3rd party, just to clarify one point. The activity with the Ukraine network, whether the Ukraine network in Italy or HVB in Germany, ARK, these assets are classified in international network. When we talked about Italy and Germany within 3rd party, it means that the activities that we do with the funds that we sell to either other banks or IFAs or private banks in Italy or in Germany.
Yes. So I was just curious as to why in Italy Why aren't you capturing that business via UniCredit Network? Why is it so strong when there's other providers?
I'm not sure to get the answer. We work for Yves Reddy on one side, but we also work with promontory, other banks, and we go directly to these clients. We don't need to to have another distributor intermediate as an intermediate between us and other distributors.
Okay. All right. Thank you.
You're welcome.
Next question comes from Jonathan Richards from KBW. Please go ahead.
Good morning. Two quick questions from me. Firstly, have you seen any pullback in retail activity as the second quarter has started And the market volatility has picked up. That's the first one. And then secondly, since 60% of Your synergies have come through or you're now guiding to 60% of Pioneer synergies coming through in 2018.
Can we expect an uptick of that magnitude for 2019 as well? Thank you.
So regarding retail activity, as you've seen, the Q3 is very good. We that's true that not that much with the retail network, but a bit more with 3rd party distributors over the very end of the quarter and probably the 1st week of April, we have some signals of some slowdown in activity. And yes, probably I mean, in line with what we can feel on the market. And I would say, clearly, in as an effect of the increased volatility on the market. So yes, there could be, I mean, at least there's some signal that there's some slowdown with distributors.
But the good thing again is that we are very diversified in the source of inflows. So in the medium term, again, very confident in our ability to meet our targets. The second question regarding Yes, the phasing in 2019. Okay. Well, it's a bit early to say.
We still have some synergies on to be I mean, to be done in 2018 and that won't have their full effect in 2018. I was, for example, mentioning that the IT migration in the U. S. Will take place in 2019. So the impact will not be seen completely in 2018.
So at the end of the day, would we account to 80% or slightly more than 80% in 2019? We'll see. But it's a bit early to say and it will not make a very, very significant difference.
Great. Thank you.
Next question comes from Hubert Lam from Bank of America. Please go ahead.
Hi, good morning. Just a few questions for me. First one is on the financial revenue line. If you can provide us a split between the mark to market as well as the interest cost on that line as well as, I guess your thoughts in terms of how we should think about this line going forward? That's the first question.
Second question is if you can give us an update on the your excess capital position, if any. And third, if you can also give us an update on your U. S. Business in terms of flows coming from that region and how that's developed since the over the last quarter? Thank
you. Regarding financial, fleet, but I think it's on this quarter, it's more or less half market effect on Going forward, what we are sure is that every month every quarter, we will not the interest charge, we are in the mark to market, difficult to make predictions. So overall, in average, we should be we expect to have positive net results over the year. But if the market are difficult again since now that we are under IFRS 9 new accounting rules, we may have some from time to time some negative results negative revenues, sorry. Regarding our capital position, we were at the end of 2,000 so we have a good capital position.
We don't have excess capital as we used to have before the integration of the acquisition of Pioneer, of course. But we had at the end of last year 1.9 tangible equities, including the dividend to be paid next month, by the way. And in terms of solvency ratio, we had core equity Tier 1 ratio of 12 a bit more than 12%, 12.4% to be exact on a phasing basis and 11.9% on a fully fully loaded basis. And so, say, core equity around 12% and the total capital ratio, including the impact of the subordinated debt of around 15%, so solid capital position. U.
S. Business? Yes, sorry, yes. U. S.
Business From the beginning, I mean, overall, the activity was good last year. Just streamline, I think we had more than €2,000,000,000 inflow. On this Q1, it's flight, very slightly negative, but it's just 1 quarter. Our market has been, as you know, more difficult. So we don't we are confident our capacity to continue to develop and we don't have still the effect on this part.
It takes time to it's normal to take place. We have a plan to develop, to export the expertise of the US platform to our client base in all the world, in Europe, in Asia and the Middle East. And say the plan has been designed, work has been done to promote and explained the expertise to our sales force a bit everywhere, but we don't see yet the effect of this plan.
Great. Thank you.
We can now take our next question from Hailey Tam from Please unmute your line.
Hello. Hi. Can you hear me?
Yes, yes?
Sorry, I thought I turned it off. Apologies. Three quick questions from me, please. Firstly, just in terms of your fund flows, Could you confirm how much of your EUR 7,000,000,000 passive flow was actually into ETFs? And also just wondered whether you've been seeing any margin pressure there more recently.
I think LIXO announced a range of fee cuts or a new low cost range last month. Secondly, in terms of your cost synergies, obviously, you said you're running ahead of schedule. And I think an extra 20% would be about €30,000,000 extra this year. I just wondered how much of that is already in your Q1 run rate. And then the third question on performance fees.
Could you remind us What proportion of your performance fee eligible AUM crystallizes fees in each quarter of a typical year, Just to give us an idea of the likely seasonality. Those are my questions. And then just I think there was a previous question and another analyst asked about MiFID II, whether that had any change on distribution behavior. And I just wanted to remind you of that as well. Thank you.
Okay. So regarding sorry, passive management for a total of €7,000,000,000 out of which I think was 2.5 or more than 0.5 inflows and just on the ETF, which makes us a 3rd collector. In terms of inflows for this quarter, in terms of assets, we are the 5th player in Europe, of course. And in terms of fees, no major change on the last quarter in the fee structure. I mean, in mind, let's say, our motto for ZTF business has been for a while and remained smarter and cheaper.
So I don't know if we are really smarter, not to judge, but we when we say we try to always be competitive and that's the way we managed to develop the business and make it profitable. In terms of performance fees, the question was about the eligible assets. So we have more than €1,000,000,000 of assets that are eligible to perform on fees. And it's I think one of your question was basically how much every quarter, it's difficult to say from 1 quarter to another. It's not the same fund that do deliver performances from 1 year to another.
But the good thing is that we have a quite large asset base, quite a large number of firms that can generate performance fees. So we don't always generate same level of performance fees, but every quarter we do generate performance fees. And the question regarding MiFID and the change in distribution, well, it's a bit it's a bit early to tell, but we do see some effect. We do see, for example, on the Italian market, move to a unit linked or segregated account. And we do see some we start to see some, if it's not, fee pressure, some thinking including and pressure on field overall, especially on distributors.
And we want to see we also see in this change some opportunities to try to address new clients and to develop new activities. And for example, I was mentioning segregated account unit clean that clearly somewhere else, we are managing them for example, for the Inicredi network and we work intensively with the Enercarelli marketing and sales team to develop the adequate range of products to cope with this and to see these opportunities.
Thank you.
We can now take our next question from Angelique Barrick Thadry from Autonomous Research. Please go ahead.
Hi. Thank you for taking my questions. Two questions, please. The first one, Just to follow-up on what my colleague asked before, could you please let us know how much of the synergies are accrued in your Q1 cost base? Because And could you provide a bit more color on how sort of the costs decline year on year on a combined basis is split.
Is there any impact of synergies? Is there any impact of FX or anything else? And my second question, Last year, you had seasonality in terms of institutional flows with big inflows in Q1 and outflows in Q2. Should we expect something similar this year? Thank you.
Okay. Yes, sorry, I forgot the question on the cost synergy in Q1 and basically the change in the cost compared to last year. Clearly, the decrease in the cost on the Q1 compared to Q1 of 2018, the decrease by around 5% are due to the synergies. Due to synergies. We have other effects.
For example, foreign FX effect, which has been for the cost positive in the sense of decreasing the cost continuing that we have part of our costs are in, for example, in the U. S. Or in Asia. On the contrary, we have some effect that increased the cost such as some price effect or the fact that for the Q1, we to on our balance sheet the impact of the external resource that we use. But these various effects, the action effect, price effect, the cost of research, more or less balance each other.
And so you can consider that the decrease you have in the cost structure between Q1 2017 and Q1 2018 are the impact of the cost synergies. And second question was seasonality in the Seals business. There is some seasonality for treasury expertise. So there are nothing completely in it. We know that overall flows on treasury product can be volatile by nature because the way institutional corporate clients place invest some available cash, short term cash as they may have.
So by nature, it's volatile. We saw generally that generally, we tend to have a good Q1. It was the case this quarter. And relatively often the 2nd quarter the flows are lower, sometimes negative, it was the case last year, simply due to the fact that many big corporate clients, which are an important part of the client base for this product, do pay their dividend on the 2nd quarter and use their cash available to pay these dividends. So overall, yes, in average, we would expect to have lower inflows on the Q2.
But again, it can be compensated by some exceptional effect such as corporate that do raise money to finance a future acquisition. So it can be significant amount, so it's difficult to predict. But again, Q2 tends to be lower than Q1.
We can now take our next question from Mike Werner from UBS. Please go ahead.
Thank you. I've got two questions here. 1 on the performance fees, my apologies if you covered this earlier. What's the mix or a general sense of the mix in terms of the performance fees realized in Q1 between legacy Pioneer products and legacy Amundi products and also any Potential any breakdown by asset class would also be very much appreciated. And then second, kind of getting back to a question that was asked at the early stages of the Q and A session.
With regards to management fees, rather than looking at management fee margins, just looking at management fees, we saw about a 3 percent decline in management fees quarter on quarter. So while you were discussing how you don't that you'll take mandates Even if they result in a dilution to management fee margins, what we actually saw was a decline in the management fees booked by Amundi despite what was a very strong quarter for inflow. So I was just wondering if you can Help bridge that quarter on quarter change. Thank you.
Okay. First, regarding performance fees, what we booked in the Q1 comes from both from, I'll say, Amundi legacy funds and Pioneer legacy funds. And especially, there was a good contribution from some Pioneer funds where the University of game in 2,000 sorry, in the Q1, which explained partially the increase in what compared to the Q1 of 2017. In terms of asset class, it's quite diversified with especially a good contribution from, I would say, multi asset products for the Q1. We are being management fee margin, as I say, in comparison quarter to quarter has to be taken with Scotia's.
1st, because some of the fees are not completely in air, especially structured product. In addition and that's true if you compared to the last quarter. And in addition, if you again compare to the Q4 of 20 7, 2018, also bear in mind that the market effect, has been negative if you compare to Q1 of 2018 to last quarter of 2017.
Perfect. Thank you very much.
We can now take our last question from Jean Jean Sasseus from ODDO. Please go ahead.
Yes, Jean Seuss from ODDO. Just coming back on the margin issue, maybe to get a better view about what is the effect of competition pressure on pricing. Could we discuss about the split about the impact of change in business mix and asset mix there and by difference what is actually the I would say there's a competitive pressure on the pricing? Second question is regarding 3rd party distribution. Did you signed up new contracts in term of extending the distribution networks or accessing new distribution networks in Q1?
And to what extent Pioneer would help you or is helping you by your broader range of product To conquer and to sign a new distribution agreement there? Thank you.
Regarding margins, business. What's the question?
The question is, we have actually, well, this kind of margin pressure as a wall with assets going faster than review to put it like that. Just to understand what is the impact there in terms of change in the asset mix, which would wait or the categories of assets, which would wait on the average margin and by difference what is the actual competitive pressure?
As a change in assets, of course, the fact that we and it's true for this quarter, it's also impact. We had good inflows in money market fund or passive management. And the rate of growth, I would say, in passive and monetary fund was stronger than in active, does have an impact on the margins. The effect of the competitive pressure, it is not measured quarter I mean, it does happen. There are no there are not suddenly a cliff effect or change for the industrial space.
We know that it's there and we know that new mandates coming in tend to be in average slightly lower in terms of margins at, I'd say, the back book. On retail, it's more a question of asset mix. But going forward, it's a bit early to MiFID, could have an impact and it's a bit early to exactly measure it. Regarding 3rd party business, 3rd party distributors, new contracts, so yes, yes, I would say kind of continuously. We try to enter with new contracts and in the recent period, I think it was especially the case in Asia, where we regularly send new contracts with new distributors.
So this thing takes time and does not reflect When you sign a contract, you don't necessarily see the impact in the coming months, but sometimes probably it's reason. The fact that, for example, we had good level of activities around the recent quarters in Japan or more recently in in Hong Kong or Taiwan, is a consequence of some relationship we entered sometimes a few months ago, sometimes a few ago. And in that regard, Pioneer is Pioneer helping? Yes, but it helps So it can help the fact that we increased the breadth of our expertise. It can help both for new contracts, but also to reinforce the relationship we have with existing clients by being able to add new expertise to what we already promoted to them based on the legacy LME expertise.
That's something you already feel in the business now?
In the relationship, yes, in the numbers, it's a bit early to tell.
Right. Thank you very much.
There are no further questions in the queue. I would now like to turn the call back to the host
No additional remarks. Just to thank you very much for your participation and next rendezvous in the 2nd August. 2nd August. Thank you very much. Thank you.
Bye