Good morning. I'm Cyril Meilland. I'm the Head of Investor Relations, as you might know. It's a real pleasure to have you and welcome you today in our Amundi's U.K. office here in London. Thank you for being here with us this early in what I know is a very festive season for the city of London. Welcome also to those of you joining us online via Zoom. Vincent Mortier, our Group Chief Investment Officer, and the fixed income teams are delighted to be here today to discuss a key Amundi strength, a key Amundi expertise, and a very topical subject in the current markets, that is fixed income. We also have a pleasure to have Aurélia Lecourtier, our new CFO.
She won't be a speaker today, but she will be available for a chat or a proper introduction during the cocktail lunch. At the end of the workshop, we shall take questions from those in the room, and if you are attending via Zoom, please use the Q&A section to ask your questions, and we will relay it to the speakers. Before we get started, unfortunately, I have to give you a short disclaimer. As you know, in our financial communication, we split our business by client segments, not by asset classes. The reason is that in terms of profitability, this approach, the client segment approach, is very much more relevant. As a consequence, you will not have, today, any revenue or profitability targets or indications. I'm sorry, it will just be about AUMs and net inflows.
Obviously, this particularity about profitability is very true for the fixed income asset class, which includes active and passive solutions, long- and very short-term investments, open-ended but also mandates or target maturity solutions, public and private assets. So it's, as you see, and as you will see, a very diverse asset class. Furthermore, we shall not give any additional objectives beyond the strategic targets we set in June last year, when we presented our 2025 ambitions plan. So no specific target for fixed income. Sorry about this, and any question, obviously, will not be answered on this. Now, back to the party, if I may say. As you can see on the slide that I'm showing you now, it will be in three parts.
First, Vincent, with the help of Monica, the head of our Amundi Investment Institute, will present an overview of Amundi's fixed income platform and its many strengths, as well as the favorable environment for this asset class. Then, we shall look at how we address different client needs when it comes to fixed income, and the growth potential of these solutions. And finally, we will hear from two client feedbacks about how our comprehensive fixed income offering is building strong client relationships. So without further ado, let's kick off. Vincent, the floor is yours.
Good morning. Good morning to all. Thank you very much, Cyril, and thank you very much for being with us today, on a Friday morning, before holidays, probably for most of you. So as Cyril said, I am the Group Chief Investment Officer, and today I will show you the strengths of Amundi in the fixed income space, and will convince you that Amundi is indeed a fixed income powerhouse. So it relies on solid foundations. So first, we have a very large and diversified franchise. Second, it is managed by experienced and high-performing teams, and you will see some of them today. Third, it is supported by efficient and scalable tools. And so these large, powerful, and diversified platforms are poised to further growth.
So this is why we think that fixed income is important for you, equity analysts and investors, to assess the potential of Amundi on top of other asset classes. So, we have put together a dream team of Amundi experts to convey this message. So you will have the occasion to see, physically or by video, all of them today. So we'll start with a general overview of our fixed income platform. I will be joined by Monica, our head of the Amundi Investment Institute. She will explain how the unique assembly of brains at the Amundi Investment Institute supports both our investment process and how we advise all of our clients. She will also tell you how we see the world and the capital markets, confirming that fixed income is a very attractive asset class today and for the foreseeable future.
So together, we will take you through our unique process and the common tools we use to deliver superior performances and solutions. So then, Swaha, our colleague, as well from the institute, will moderate a panel of our fixed income experts to discuss, how we address the needs, of our clients. Now that we have set the scene, and introduced the various speakers, let's get started. So why Amundi is a, a fixed income, powerhouse? So first, we are very large, so as you can see, more than EUR 1 trillion of assets and very well diversified by clients and geographies. So our comprehensive platforms covers the whole spectrum of client needs with, senior investment teams located very close to our clients, and but as well, very close to the assets, we manage.
So these teams follow a reliable and effective investment process with fully ESG-embedded research. And they also use a best-in-class tools that I will develop further on later, such as ALTO, which stands for Amundi Leading Technologies and Operations, for example. So thanks to this approach, our fixed income teams have been able to deploy agile and scalable solutions. So we have been indeed able to quickly adapt to this major regime shift we have seen in the marketplace over the last two years, and the resulting changes in the client needs, and in particular, the rise in risk aversion here or there.
So today, we'd, we shall give you examples of the successful solutions we have, designed, built, and successfully solved 2,000 of different clients in all countries. This includes, just to mention a few, structured products, Buy & Watch , which Amaury prefers, being called Target Maturity Funds, but it's the same at the end of the day. Fixed income ETF, and, of course, liquidity solutions. So all these, recent successes demonstrate that Amundi is well-positioned to take advantage of key structural trends in the industry, especially those applicable to fixed income. So namely, to start with, and it is a deep conviction, that has been, further strengthened by the market, evolutions, that active management is still alive.
So there's a future in active management, and our investment team have a long track record of delivering Alpha, and I will show it to you later on, which makes actively managed solutions pretty attractive. In parallel, passive fixed income solutions are scaling up. Here, Amundi's size and set-up gives us a competitive edge, and Laurent will talk to you about it later on as well. Private debt is also increasingly used by our clients as a source of additional yield and diversification. So for Amundi, this growth is further boosted by the strategic emphasis we put on real assets, as you have seen in our 2015 plan. And finally, as a common thread, sustainability is gaining ground in fixed income.
Govies, ETF, emerging market debt, are all areas where Amundi has built solutions that complement its more mainstream, responsible products. So these are the key messages and topics we will discuss today and develop. So, as you already know, because you cover the Amundi, Amundi stock, so Amundi is the number one asset manager, and, we are, also the only European, and in fact, the only non-U.S. asset manager in the top 10 worldwide, with close to EUR 2 trillion in asset management, evolving also depending on market effects. This large asset base is very well diversified by clients, asset classes, and geographies, as you can see here, of course. And more than 1/2 of these EUR 2 trillion, in fact, relate to fixed income. So let's see in more details in the next slide.
So our fixed income asset base here includes active bond expertise, so covering global, global bonds, global credit, Euro, U.S., Japan, rest of Asia, emerging markets. Then liquidity solutions, which include money market funds, but also some ultra-short-term bond strategies, up to one year in maturity, mainly in euros, but also in U.S. dollar. We've got then fixed income passive insurance, so ETF, but also some mandates. These have grown pretty fast, and now they account for 5% of the fixed income total. Then structured products, for which, as you may know, Amundi is a market leader, and we have been seeing lately a growing interest in fixed income structured products on top of the traditional equity ones. Private debt, I mentioned before, which is an important part of Amundi's real asset offer.
And finally, our Asian minority joint venture, for which fixed income is also a large part of the assets they manage. This breakdown does not include the fixed income part of multi-asset products. If you were to include this part, it would add around EUR 200 billion. Indeed, today, we focus the presentation on pure fixed income products, not multi-asset, because investment needs and objectives of a pure fixed income products and of a multi-asset one are indeed different, even though naturally fixed income accounts for the majority of the exposures in a multi-asset strategies. So to sum up our expertise, we cover the whole yield curve from ultra short-term to very long-term bonds, across all the regions and currencies, either in developed as well as in emerging market, active as well in passive management.
So that's why we're talking about a powerhouse, because we cover it all. On this slide, I'm sure you are also aware that one third of our fixed income assets are in fact managed on behalf of to insurers, so Crédit Agricole and Société Générale. This involves a very specific expertise, so let's have a deeper look at it. So Crédit Agricole and Société Générale, as you know, were the founders, founding partners of Amundi back in 2010, and they continue to be our two distributing partner networks in France, and more generally, in multiple countries in Europe. They are very large insurers, especially in life insurance, which is in France the most popular savings product.
Thanks, essentially, of course, to tax advantages, and it is mainly distributed through banking networks, which have around 70% market share in the life insurance distribution. And Crédit Agricole Assurances is by far the number one French life insurer. So for Crédit Agricole and Société Générale insurers, we manage the underlying assets of both types of wrappers. First, the traditional life insurance, which is called Euro Contract, which is offering a capital guarantee and a yield coming from a portfolio of investment, which is mostly made of bonds. Both Crédit Agricole and Société Générale Insurers delegate the vast majority of the management of this portfolio to Amundi through mandates. So this business is included in the institutional client segment in our financial communication reportings. Sorry.
The other wrapper is a unit-linked business, in which, retail clients buy shares directly in mutual funds, that they can also buy directly outside a life insurance contract. So only the wrapper is changing, and, therefore, this business is part of the retail client segment. So let's focus on the former, the institutional mandate. Because the capital is guaranteed, the vast majority of the assets are fixed income. So EUR 360 billion out of the EUR 406 billion, so meaning close to 90% of the assets. And it must be in euros. So actively managed euro bonds account for 93% of the mandate's fixed income compartment. And if you add up liquidity solutions, so money market, especially, you add another 5%.
So altogether, 98% of the assets of fixed income are euro-denominated, short, and long term. There is also some diversification to enhance the yield, and so we also manage smaller amounts in other asset classes, including some private debt mandates. The management of these mandates is under very strict constraints set by the insurers. Including, of course, the asset allocation, even though we advise them on this. Thus, given the style and the size, the average management fees is low, similar to all the big insurance mandates we may have elsewhere. We are talking about 3.7 basis points per year. However, we need to keep in mind that these mandates are very large, so 3.7 base, we have a very significant scale effect.
They are very stable with the long-standing relationships that we have created with both partners. Florence Barjou, the CIO of Crédit Agricole Assurances, will tell you more about this later through video. But as well, thanks to this partnership, our teams gain lots of experience and skills from this mandate, and it's also a source of innovation given our proximity. However, in the current market environment, the traditional life business is struggling in France, because returns still reflect essentially the investments which has been made over the past decade in a low-yielding environment. So as a result, these mandates have been showing regular outflows in the last two years. This is a trend in the whole industry. It's not particularly a trend at Amundi, and it does not reflect our own performance or the quality of the product.
Therefore, when we look at inflows into fixed income, we have restated for outflows from Crédit Agricole and Société Générale insurance mandates, so that we can better understand the true underlying trends. This is what we see on this slide. We have also excluded our minority joint ventures and liquidity solutions, which are volatile and seasonal in nature, but we'll come back to it. Looking at our inflows over one year to September, we have enjoyed EUR 24 billion of positive inflows. As you see in the chart, inflows have accelerated in the last two quarters, reaching more than EUR 10 billion in the third quarter. This was many thanks to the successful launch of products adapted to the current environment, both in active and passive, as well to a certain extent to private debt.
So the teams will elaborate further on this success strategies later on. We have not included the liquid solutions in the chart, but I would like to stress that the long-term results are also very good in this business. If you look at the past four quarters, our liquid solutions business had inflows of around EUR 33 billion. So this inflow performance puts us in a very good position in Europe and even worldwide, and we see this in the next slide. So according to Broadridge, the source you probably know, total inflows in open-end bond funds in Europe in the year to September have totaled EUR 111 billion, of which EUR 17 billion was in active.
We rank three in this market, both in terms of asset base and inflows. But we rank one in the most dynamic segment, which are the Target Maturity Funds. We launched 37 funds during the period, sometimes dedicated to single clients, and collected EUR 11 billion from this strategy, giving us a market share of 14%, in Europe. So Amaury will tell you more about our strong expertise in this area in the second part of this workshop. These strong inflows are as a result of our ability to rapidly and successfully adapt to the new market conditions and the changing client needs, but also it is due to the continued strong performance of our investment team.
So over one, three or five years, more than 2/3 of our fixed income funds in terms of assets are in the first or second quartile, and thus outperforming their peers, because normally it should be half. So we are 2/3. In particular, I would like to stress that we have 82 Amundi fixed income funds, which are rated by Morningstar four or five stars, giving our sales teams, wherever they are, plenty of performing products to offer to clients and covering a wide range of client needs. Finally, 92% of our funds have outperformed their benchmark in terms of gross performance, so before fees. So this is thanks to a combination of expertise and sound investment governance that we will cover now. Sorry. So first, let's have a look at our teams.
Of course, our teams are our best asset to our franchise. So we have around 400 investment professionals directly involved in the management of fixed income portfolios. This includes, naturally, portfolio managers, but also credit research analysts, so issuer research, investment specialists, who are to promote the expertise to sales, as well as our Amundi Investment Institute colleagues, to macro research, strategy, quant, and the ESG analysts. So our fixed income professionals are split across each and every Amundi's six global investment hubs that you have on the map, with as well some professionals located close to more local markets and client bases. So it is the other dots you can see on the map. This number of people does not include the fixed income teams in our minority joint ventures.
So all these teams include very senior investment professional, who have, who have, experienced, or went through various cycles, including all the major crises we have known in the past decades. And, you know, experience is, something important to have when you manage portfolios. And our investment, performance is also the result of the, governance that we have put in place for investment. So let's have a look at it on the next slide. So the keystone, of our investment management, governance is, the Global Investment Committee. So I have the privilege to chair it, once a month, or, more frequently when there are exceptional events. So we don't hesitate to gather exceptional investment committees.
Key investment heads participate to this committee, including all the senior members of the Amundi Investment Institute, plus each and every head of all investment platforms, including passive management and real assets. The GIC, so Investment Committee, is a place where we discuss and review the macro environment, the strategy, and we discuss, of course, market past and coming action, and we agree on a shared, common, top-down views and scenarios. So these are then shared through Amundi to all the investment staff. For passive management sales teams, it also provide an opportunity to have a meaningful discussion with our clients and to recommend products which are adapted to our views.
For active portfolio managers, it is a valuable input that they must use to support their investment decisions. Even so, of course, at the end of the day, they have a final accountability for their investment decisions. No pressure on them, but at least it's a shared frame that is known by everyone. We've talked about our teams and presented the Global Investment Committee, so let's go into a little bit more details on our investment process, starting with Amundi Investment Institute. Monica, you are the head of the Amundi Institute, so you will explain how you are organized, and how do we position ourselves in this new environment, and in particular, in the fixed income space, because it is a topic of today.
Thank you.
Thank you.
Thank you, and good morning. So why an institute? We decided two years ago to consolidate the top-down research capabilities out of Amundi. But why an investment institute? 'Cause we strongly believe that being close to the investment floor, to the portfolio managers, is a key success factor. What does it mean to be close to them? First of all, we sit together on the floor on a day-by-day interaction, which allow us to really engineer from scratch, from the first moment, the investment ideas. And second, we really want our people out of the institute to have skin in the game, really to own the recommendations we are putting to the investment floor. And the point that, for some of them, we really track the recommendations into a paper portfolio.
So there is this really culture and mindset out of our research people into getting into the final investment process. And the way we've been organizing the institute, if you look in the slide, the various teams, is really mirroring the way the investment floor is working, so that we have the developed markets strategy, fixed income and equities, multi-asset, emerging markets. And we tried also to facilitate this proximity via the geographical dispersion of the team, so that, for example, our fixed income experts are primarily based out of Paris. This is where my team is on the fixed income and on the equities. London, emerging markets, so we are really trying to get closer on a day-by-day activity. What we do?
We do top-down research, macro and markets. We do partnership with the academy and main organization. This is really allowing us to be on hedge of thought leaderships. One of the task, it is true that we are close to the investment floor, but we are also client-oriented, and this is allowing us to face the arena with all our client spectrum. We do advisory, 'cause what we learn over time is that what we were doing with EPMs is actually what our clients are asking for. So there is this knowledge transfer, we are partnering with the outsourced CIO team in order to get closer to our clients, answering their needs.
And then publications, we have an entire team, and today we have Swaha here representing them, dedicated to some flagship publication you can find on the research center. That goes from markets to macro to topical studies, and part of them will be distributed in the coffee room outside. What is specific of the team is that it is a model-driven, disciplined investment process that we have been building. So really the talent of the people in the institute is the one of adapting and finding the right technique to finalize the macro or the strategy or the strategy call.
So this is, I hope that it is clear how the institute is working, and I would move to the big story for 2024 and beyond. So, for those who have been following us over the years, we have in mind this new global disorder idea, that actually the pandemic, the war, the last four years have been pushing forward. So that eventually there are many transitions that are taking place on the economic, on the policy, on the geopolitical, and the technological front. And these transitions are taking place all at the same moment, and the policy answers that we will get will define the world and the society we are gonna live in the decades to come. So fixed income makes no exception.
You might be very familiar how with these two charts where we see really the rush, the faster hiking cycle the central banks have been pushing it in the advanced economy, as well as in the emerging market, and the returns that has been delivered from the market. Actually, this was quite a busy week on the central bank front, and eventually we really think that the central banks in the advanced economy are going to pause, and this is a pivot for the rates that from there will go lower. It's really an opportunity that we're going to see on the market.
So going into the base scenario, so our story, for 2024, that really crosses, this more, long-term, new global, disorder conviction. Still very important, the combination of growth, inflation, and monetary policy. On the economic front, we are seeing the global economy progressively slowing down. This is not only in the advanced economy. We have this call for the U.S. entering a mild recession in the first half, but China is slowing down, and it's slowing down for the right reasons. They want to rebalance, growth. They want to engineer an economic model, that is less oriented to the real estate, more keen to, to push on the progress on electric vehicles, on, superpower computing. So, we really expect China, to run at a lower gear in the medium term, between 3%-4%. Inflation.
We made the call that inflation was not as temporary as the central banks were seeing it, but we were leading into a different inflationary regime, and it will be the case again for 2024, where we see inflation progressively moderating above the central bank's target. So final destination, the central bank target, won't be a story for 2024, more likely 2025, but definitely it won't be a linear journey. Central banks still at the center of the game. We hope to get some fiscal, but governments don't have the money, as we see from the vulnerabilities on the debt overhang. But we see some asynchrony between emerging market that are already in a more advanced stage of their path. Some of them already started to cut.
But the Fed and ECB are ready to do that. Honestly, we are more cautious than the market consensus. We don't believe that this will be a story for the first quarter. It will come later in the second quarter. The reason is that the battle over inflation is not over yet. When it goes to the Euro area, for example, still we do expect two readings on the uptick, mainly because of base effect, but the wage bargaining is still on, and it will be completed by April. So it will be unlikely for the ECB to move in advance, having in mind that the ECB is much more concerned about inflation than growth when compared to the Federal Reserve.
On the vulnerabilities, I would just mention two. One is more short term and relates to the progressive tightening of financing and financial conditions that will eventually start to bite the consumers and the corporate sector. Think about the U.S. consumer. It is true that recently, we've seen financing condition, financial condition getting easier, but this was mostly due to lower volatility. Mortgage rates remains extremely high. So, this is where we think the recession will be coming in the United States and the debt overhang. Over years, the governments have been piling up tons of debt that will need to be repaid, and this makes the call for interest rates to remain under a control level.
Our main hypothesis is that while the U.S. might engineer some productivity gains, this is helpful to maintain in control the debt to GDP ratio, but the rates call has to be for rates to move progressively down. This is the base scenario, but the alternative scenarios are equally important. What we learn over time is that you don't have to have all the eggs in one basket, but there might be opportunities to be exploited on the downside or on the upside. And this is why when discussing at the GAC, we present the base scenario, but all the alternatives that allow us to fine-tune the core allocation, but also to put in place some satellite, if not proper hedges to the portfolios.
The nice thing for 2024 is that all the scenarios that we have been elaborating, one way or the other, are going to see fixed income as an important layer in the portfolio construction. Think about if we are completely wrong and we get a stronger growth in the developed market and inflation pressures being back. Well, core Govies , if not, it might really help in diversifying the portfolio construction. Or if we get into a deep recession, so things really get worse than it's in our worst case, then again, the fixed income can offer a good diversification opportunity.
There will be another big change next year, where correlation eventually between equity and bonds will get back to negative, allowing a nice and easier portfolio diversification. This drives me to the last slide I wanted to share with you, 'cause to me, it came out as a surprise when I saw the plot into this slide. Look at the last three years' performance of balanced portfolio. We have here two example, the U.S., which is more risky than the euro-denominated one. But it is astonishing how out of sample is the performance that a balanced portfolio in the euro area record over the last three years is negative. The long term is the last 25 years time sample.
So really, it has been an outlier. It goes with these stories of miracle markets that we have seen in this new global disorder that is trying to find an equilibrium. But this is telling us something more. It is not only fixed income per se that will be an important contributor to performance, but once the diversification subject comes into play in a multi-asset portfolio, again, fixed income can be a positive contributor. So this is for me. I hope that you get a clear understanding of what we do and how we see the world, and I hand over to Vincent again.
Thank you. Thank you so much, Monica. So indeed, a much better environment for bonds and higher returns. So this is a promising starting point that we work with from a top-down point of view. So in order to deliver a full value to our clients, we add the bottom-up approach, naturally, and the actual implementation of these ideas into solutions to create a full investment process. So what makes Amundi unique is a successful combination of very efficient components of this value chain. So let's have a look at this into the next slide. So first, it is important to stress that Amundi is in control of the whole value chain for all asset classes, but of course, particularly fixed income as well.
So from macro ideas, as described by Monica, to reporting, client servicing, Amundi has built a very effective and scalable process with experienced professionals using mutualized tools which are quite optimal. So the ultimate goal for us is to build the best value proposal for our clients, whoever they are and whatever are their needs. So in fact, the tools we have created are so efficient that we sell some of them to other asset managers, so our competitors, and also to clients in the investment value chain. So this is the case for ALTO, that I mentioned before, and as well for trading platform, but also for the Amundi Analytics to the data provider in the ESG space.
So the next slide, I will take you through our ESG approach in a simple way. So Amundi is recognized as a leader in this area, and ESG has been fully integrated into our processes, and in particular, fixed income strategies, since multiple years. We cover 18,000 issuers with our proprietary rating system, which ranges from A for the best to G, which means when you are G-rated, you are excluded from all portfolios. We also put together a limited number of sectoral exclusions that I will mention today. So covering thermal coal, unconventional fossil fuel development, tobacco, non-conventional weapons, biodiversity-harming activities, and finally, serious human rights abuse.
More generally, beyond these exclusions, our philosophy has always been to focus on what we call a best-in-class approach. So by industry, with a strong engagement policy, so that we, that when we have, voting rights, for example, which push companies to improve their credentials and their trajectory. So of course, voting is possible only if you are shareholder. But you know, owning a debt can also, strengthen our position with issuers in the dialogue, because cost of capital is something also very important, naturally, for issuers. So thanks to our proprietary research and the very large coverage we have, with a combination between ESG analyst, but as well, external data and the development of our portfolio managers and functionalists-...
We offer, we are offering a very wide range of solutions in the responsible space, with various shades, as you can see, of green, from the very light to the very dark. So depending naturally on the objectives of the clients. We are also working a lot on other dimensions, like social. You can see here the blue box, social bonds are developing fast, and we have launched multiple years ago, some funds in this space, which are successful, and some mandates as well. All are open on that funds, and of course, fixed income funds must have a weighted ESG average rating better than their benchmark. So it is what we call the beat the benchmark.
And so, this constraint, which is for all funds, is monitored into ALTO, our IT system, in real time, both by the portfolio manager and the risk department. Then we offer a very wide range of responsible investment strategies. So from the best in class, which is what you call mainstream, to some deeper, like Article 9 funds, in active and passive, as well as quite a wide, I think the wider in the world, Net Zero strategies. So fixed income strategies, as you can see, are very well represented in each of these categories. And as well, in terms of strategies, so we cover all the yield curve, issuer types, credit seniority, quality, through our shades of ESG intensity. So, we...
As I mentioned, we even now try to go beyond the pure traditional green or social, and we want to go one step further, and the just transition for climate is a good example of combination of green and social. So, all this is achieved thanks to a very close cooperation between ESG research and credit analyst research teams. So together, we rely on 100 analysts to generate research on single issuers. So this organization allows us to fully integrate the ESG and credit fundamental approaches, and build optimized portfolios, combining the two components. So both ESG and credit research are made available to all portfolio managers via ALTO. So there is ALTO Research and ALTO Sustainability, so that you can combine.
I will tell you more about ALTO on the next slide. ALTO is a suite of IT solutions, which is sold, as I mentioned, to external clients by Amundi Technology. It is a commercial success, lately, with the external clients, but we tend to forget that the first and real benefits is for Amundi's own investment team, so for ourselves. It helps to manage all Amundi assets, including fixed income strategies. On fixed income strategies, we have 1,300 portfolios in ALTO. It covers the full value chain for the integration of research, both functional and ESG, to middle office, reporting, client servicing. It is also the tool to route orders to the trading desks.
It's also a tool to analyze portfolios in terms of risks or performance, and simulate what prospective trades can how they can impact, in terms of risk and ESG, the portfolios. And you have so lots of metrics to play with in the tool. So, what is also the beauty of it is that it does this for multiple portfolios at the same time, in a aggregated view, if need be. So it's a very efficient way to manage portfolios. It is also very customizable, sorry, to the needs and preference of each and every portfolio manager. So it's a very user-friendly tool. So for me, it's a very valuable productivity tool. It is flexible, adaptable, and thanks to this, we can have a short time to market.
And as well, it is quite cost efficient. And of course, the more we get external clients, the more it is getting cost efficient. So once a trade is booked by a portfolio manager in ALTO, it goes directly to the dealing room, which is another key feature offering. So Amundi Intermédiation, which is the name of the trading desk, regroups all the teams in charge of executing the orders of Amundi portfolio managers, but also more and more of external clients, who have dedicated to us the execution of their orders, of course, in a fully segregated manner. So Amundi Intermédiation offers around-the-clock trading capabilities with experienced traders, very good algorithms, and access to the full market.
Given our size, we have access to all brokers, naturally, all banks, which are active in all types of segments of the capital market. We have 26 traders dedicated to fixed income, and on average, they have been in the market for more than 10 years. So 14 of these 26 are credit experts, so covering all kinds, all regions, and all seniority and quality of credit. So, as a result of the assets we manage, the platform intermediation, trading platform is, of course, very large and very active. Last year, they have traded more than EUR 100 billion in investment-grade credit, just to mention one figure.
Given this kind of size, an access to primary market, which is unparalleled, and as well, a liquidity in secondary market. So this provides our portfolio managers and strategies a very low and competitive execution price. We can capture, we execute much better than mid price, so and very often it's providing performance to the portfolios. And like ALTO, Amundi Intermédiation is flexible and cost efficient, so it's clearly a competitive edge for all the funds we are managing.
It is also very important to have big, well-organized trading desk to ensure the proper management of the key parameter, in my mind, for fixed income, which is liquidity. So liquidity is something that we have put the focus on for many years. It's one of the key factors for us, and so on the next slide, we'll talk a bit more about it. So the liquidity management is one key part of the process. I would say the final step of the investment process, and it is as you see here, we've got a centralized and big risk department, which is able to consolidate all exposures in portfolios, of course, by issuer, by sector, whatever the angle.
262 people in the risk department. Of course, not only on fixed income. It is by nature, independent. This department is headed by Eric Vandamme, who is member of the General Management Committee, and reports directly to the Deputy CEO. So, of course, risk managers don't manage portfolio, but they are a very powerful second line of, of defense. First line being operational teams, and, and then after, you've got internal audit. They measure risk, they measure risk on a, on a real-time basis. That's very important, so it's not overnight batches, thanks to Alto.
And it is in charge of making sure that each and every portfolio is fulfills the mandate we get from clients, and of course, all the rules that we have from, like, regulators in particular, and as well, some rules we can define ourselves. So in fixed income, as I said, a key focus is on liquidity. So many strategies involve investment that are made in long-term assets that will not be repaid before many years, for long-term bonds, naturally. But investors that buy open-ended funds, they must be able to cash out at any time. And so most of the time, credit markets are okay, but sometimes they are not as liquid as equity markets, and sometimes liquidity just disappear.
Remember the April 2020, during the COVID. Even short-term liquidity solutions, so with very short-term assets, must be managed in a way that we always are able to meet redemptions with a very limited cost. So we are the, in partnership with the risk department, we have put together a big set of rules in order to have a framework around it. So just to mention a few tools. First one, we have defined some cash buffers or cash equivalent, in particular on money market, because so money market, for some strategies, can go up to more than 20% cash or equivalent, while the EU regulation put a minimal bar at 7.5%.
We also have, in each of our funds, a Swing Pricing mechanism in place since many years. Meaning that under certain circumstances, for big inflows or outflows, the exit price, or entry price, might be a little bit different from the mark to market price, just to take into account the cost of liquidity resulting from this specific order. In very extreme cases, our funds can also have a gate mechanism. Of course, it is the last thing we want to implement, is to gate a fund, but in the toolbox it exists. So to conclude on this part, our process is entirely under our control. That's very important.
Every step is efficient and scalable, so we can grow a lot with our current setup, and we are ready to adapt to new client needs. And this is precisely what we have been doing in the new regime shifts that Monica described. The next section of this workshop will give you concrete illustration of this. So we're going to take a short, well-deserved break. And after that... So five minutes, you said, around? Five around. And after that, we our expert will tell you how to address the various current needs when it comes to fixed income. So thank you very much for your attention. Enjoy your coffee, and see you back in five, six minutes. Seven, six. Thank you.
Yes, indeed, we'll take a short break, about five minutes, so we'll be back at around 10:35 A.M. Just to make sure that people stay tuned online. Definitely, we will have some very interesting business cases and a very interesting panel afterwards, so stay tuned. Thank you.
Welcome back. I'm Swaha Pattanaik, Head of Publishing at the Amundi Investment Institute, and as promised, in this segment of the workshop, we're going to be going into a little more detail about how client needs are evolving in light of the changing interest rate environment that Vincent and Monica have just described. We're going to especially go into our fixed income capabilities and how they are meeting these client demands. To do this, it's a pleasure to welcome with me on stage Amaury d'Orsay, who's sitting in the middle, and is the CIO for Fixed Income and Liquidity Solutions. Welcome, Amaury.
Welcome. Thank you.
Next to me is Sergei Strigo, the head of our Emerging Market Fixed Income franchise. Hey, Sergei. And on the far side is Laurent Trottier, the CIO of our Passive Management business, which includes a sizable portion of fixed income instruments. We're going to also show you a couple of very short videos from Jon Duensing, the head of U.S. Fixed Income, and Thierry Vallière, the head of Private Debt. The two of them were unfortunately unable to make it to London, their loss, given the weather, but, but have some interesting views and case studies to share. So our discussion in the second part of this workshop is going to focus on the four main reasons why clients turn to fixed income.
There's yield and earning an income, there's capital protection, diversification, which Monica mentioned earlier, is really important, and what we like to call yield with impact, which is responsible investment in the fixed income space. Let's turn first to yield and income. So the rise in market interest rates that we've seen over the past year has taken us a long way from the subzero bond yields that were so widespread not that long ago. As a result, fixed income is actually finally delivering on the income bit of its name. What are considered core strategies are therefore very much back in vogue. Amaury, I'm going to kick off with you and ask you, what sort of core strategies are clients really looking for right now?
Well, good morning. Our investors are looking at many core strategies: government bonds, investment bonds, high yields in dollar, that Jon will describe afterwards, in euro, in sterling, in yen, or in global, where you can take opportunities for the still divergent economic cycles around the world. It is really at the heart of our asset under management. We manage EUR 550 billion on credit, aggregate, and Buy and Maintain strategies. Today, investors look mostly at safe assets, government bonds, investment-grade credits, because they fear potential recession. What has been striking this year, outside of the core strategy, is the massive success for strategies that are looking for capital preservation. Why? Because investors have been badly hit in 2022 on their mark-to-market, so they don't want any more losses or negative mark-to-market, and they've been looking for strategies, looking for capital preservation.
Our conviction is that after a year of stabilization of the rates market, investors will look more and more for core strategies in 2024, and Amundi is very well positioned for that trend.
Good to hear. Laurent, what are you seeing in the passive space?
Thank you, Swaha. Good morning, all. One of the major trend that we have seen this year is the acceleration on the adoption of indexed investments within the fixed income space. And as an illustration, we can have a look at the UCITS ETF flows. And on the three first quarter of the years, fixed income ETF were representing 46% of the total ETF flows, whereas it is representing 26% of the total AUM. So it's a sharp increase in the share of fixed income within the ETF total asset mix. And we expect 2023 to be the best year ever in term of net new assets in the fixed income ETF space. And these are straightforward implication for Amundi.
You may have noticed in the previous slide presented by Vincent, the one on the breakdown on the quarterly flows of Amundi. You may have noticed that ETF and indexing fixed income has positively contributed to each and every quarter on the Amundi net new assets.
Thank you, Laurent. Sergei, over to you for the emerging market area.
Yeah, sure. Emerging markets in general represents a very attractive yield enhancement opportunities for our clients. When you look at the level of yields or the level of spreads on EM bonds versus traditional developed market fixed income for similar duration exposure, clearly the levels are very compelling. And if you look at the overall yields that emerging market offers, is around between 6.5%-8.5%, depending on the local currency or hard currency. That's a quite significant yield with regards to EM space. If we look at the performance overall year to date, and obviously after the very dovish Fed, we've seen it's been enhanced even further, but we are hitting double-digit returns this year, both on the local currency and hard currency.
In local space, it's over 11%, year to date, and we're very optimistic for next year. We think that the market will, in EM bonds, will deliver as good as returns we have in 2023. But of course, we believe that navigating idiosyncratic and geopolitical risks within EM, within EM space is very important, and there you need a dedicated emerging market debt specialists, like Amundi is within that space, of course. We're benefiting from a very significant in-house resources, having a dedicated platform, combining EM debt and EM equity within one roof, and having 360-degree view really when it comes to emerging market fixed income space.
Very well-resourced platform, 79 investment professionals with 25 portfolio managers on the fixed income space, managing over EUR 27 billion in dedicated emerging market debt portfolios, and obviously benefiting from very significant, as Monica said earlier, in-house resources on research on the macro, EM macro, and corporate credit, as well. Overall, we've had a very stable, I would say, asset base and overall, with healthy mix of institutional and retail clients. Over the past two years, we've had small inflows in EM fixed income portfolio, but it's in very sharp contrast to what we have seen in the market in general, where there's been more than $100 billion of outflows from emerging market funds overall.
And again, as I said earlier, we are very optimistic, having a better macroeconomic backdrop, more dovish interest rate policy, for the inflows to really pick up into 2024.
Thank you, Sergei. You just mentioned the Fed. I'd like to turn at this point to the video we have of Jon Duensing, our Head of U.S. Fixed Income, and he is going to explain a little bit more.
The U.S. investment platform is very representative of Amundi's global fixed income capabilities. For global asset owners, both institutional and retail, our team of investment professionals manages and advises our U.S.-focused fixed income solutions across a wide range of market sectors, credit quality, and duration. Our portfolio management and investment research professionals average more than 20 years of industry experience. We have established strong and long-tenured performance records across broad, multi-sector, and targeted single asset strategies. With more than $50 billion in assets, or approximately half of the assets managed in the U.S., the fixed income platform offers a unique combination of scale and flexibility that is very effective in meeting domestic and global client needs. I'd like to highlight a business case that illustrates these points, as well as the benefits of global organizational coordination.
A few years ago, a leading European bank desired to enhance its delegated portfolio management, or DPM, offering for clients. As part of the service, the bank launched an advisory platform which offered local clients global market exposures. For selected market segments where the bank did not have internal expertise, they contacted asset managers such as Amundi. This inquiry led to an advisory partnership with the bank and the launch of a dedicated U.S. core fixed income strategy. Our U.S. fixed income expertise, as well as a strong local relationship with the client and our firm-wide capability to build bespoke client solutions, all played vital roles in the strategy's successful creation and launch. The solution has been a very positive experience for both the bank and its clients.
The strategy has enjoyed a sixfold increase in assets since inception, and the partnership has offered a gateway for other global opportunities with the bank. This example serves as a template for global coordination within Amundi Group, where regional investment management expertise is leveraged with local sales and client service knowledge to satisfy a global investor's specific need.
... So as Jon explained, this is a really interesting example of a core U.S. strategy being imported to Europe and being sold to clients who may not have perhaps thought of such strategies before. Let me turn back to our panel now. So, Amaury, you name-checked earlier something, and Vincent as well, I remember, Buy and Maintain. And, just as a word of explanation, the aim of Buy and Maintain funds is to achieve relatively consistent yields over quite long periods. At the same time, default risk is being really carefully monitored, and bonds are being sold if credit profiles are deteriorating significantly. So Amaury, can you outline sort of the inflows we've seen on this, and why? Also, how are we managing to reach new clients?
Yeah. So Buy and Maintain is really the core of the core. We manage EUR 375 billion on Buy and Maintain, and we have done that over the last 30 years. It's a multi-decade expertise that we acquired thanks to our group insurer, so Crédit Agricole Insurance and Société Générale Insurance, as has been highlighted by Vincent. But this expertise benefits to our other external clients, other insurers, or pension funds. And thanks to this strength, we are number one in Europe. We have a very wide access to the markets. We are the number one client for all Euro issuers and investment banks in Europe. We have a strong credit analysis on a very wide environment, universe of investment, and we have tools, efficient tools, to match the cash flows and to optimize solvency capital requirements.
We have built a Net Zero Buy and Maintain capabilities for net zero asset owners, clients. We are able today to construct portfolio between 3.5% and 4.25% in terms of yield on the euro market, and that has to be compared to 0.5% two years ago. The past year has. It has been outlined, we have seen outflows on our group insurers', business, but we have seen inflows on external clients, thanks to new client acquisition. We are quite positive in terms of flows for 2024 because we will see some insurers to still close some duration gap, and we will see more and more institutional clients to allocate to fixed income.
As an example, we have just onboarded a long-term bond portfolio on 30-year bonds, quite complex portfolio, with many currencies to hedge for, pension funds of our European corporate, clients. This is quite complex, but sticky money for 30 years. So pretty convinced that in 2024, after a year of stabilizations and behind the peak, as Monica said, we will see inflow on our Buy and Maintain strategies.
Great! So let me turn now to the second of the reasons investors may choose fixed income, which is capital protection. So I think as Monica pointed out, it was a really tough year in 2022, and you mentioned this as well, Amaury, when bond and equity prices were both falling. This led to a real boom in Target Maturity Funds, and Amundi is a clear leader in this segment. Perhaps you could talk us through, Amaury, on what exactly these funds aim to achieve and what Amundi's been doing to meet this upsurge in demand for them.
Yes, indeed. We have seen a boom in Target Maturity Funds. It's answering two needs: one, a predefined income, and second, capital preservation. With Target Maturity Funds, we build portfolio that are able to deliver a coupon between 4.5%-5%, depending on the market competition, with 80% of high yield and 20%... 80% of investment grade, sorry, and 20% of a high yield. This is the income. Then, a predefined maturity between one year to five year. Most of the funds that we have built are five-year maturities. It means no constant duration, like most open funds, and it decreases over time, and then it closes. We select very thoroughly the names. It's very important to avoid any defaults on these funds, because you need to deliver the promise to the client.
You need to be sure that the capital will be fully reimbursed. So what differentiate us versus the competition is, first, we have a very wide access to the credit universe, thanks to our credit research. We have a very conservative approach, which means that we are not trying to maximize the coupon, but really to deliver the promise to the clients. And actually, we have set up a buffer to absorb the losses, if any. It is essential in the client proposal, which means that we are able, with this buffer, to sell credit deterioration, if there is any, and to replace them with another credit quality. That's why it's actively managed portfolio, and this is quite unique in as a setup in the markets.
Thanks to all these features, we have been able to distribute with our key partners, UniCredit, Sabadell, Crédit Agricole Italia, and with our third distribution clients. Thanks to that, indeed, we are number one in the world, and we have taken 17% of market share in 2023. The momentum is still positive, and we are working currently on thematic Target Maturity funds, and also on Target Maturity funds in dollar for our Asian customers.
Okay, interesting. So one of the things I should flag at this point is that the target maturity fund portfolios are constructed in a way, as Amaury has pointed out, there's great care taken to protect capital, but they don't offer any formal absolute guarantee that this will be the case. That's in contrast with structured products, which therefore may be more appealing to investors who really need to ensure there's capital preservation. I think this is probably the right juncture, therefore, to turn to our second video, which features Yann Lhuissier, the Deputy Head of Retail Distribution at LCL, who will explain how Amundi has been able to help and partner on this front, and also the close partnerships in the distribution network that we build and why that helps make a success of these sort of products.
Good morning, all. The partnership between LCL and Amundi is a longstanding one. We have been working together on structured products for more than 10 years and have been very successful over this period in terms of inflows as well as performance for our clients. Amundi is a precious partner that help us identify the needs of our clients, build effective solutions, and support the network in their sales efforts. The massive increase in interest rate in 2022 provided the opportunity to steer the structured investment solutions to fixed income. This asset class had been somewhat forgotten by retail investors for many years because of the low or even negative yields.
Since the summer of 2022, the responsiveness and the excellent collaboration between Amundi and LCL teams made it possible to quickly roll out a new offering of structured notes, meeting the clients' needs for guaranteed capital and an attractive yield. To be successful, we had to overcome two challenges. First, we had to make the solution sufficiently attractive in terms of return and maturity. To achieve this, Amundi was able to adapt its proposals, either in plain vanilla structuration or even in autocall format, to improve the promise to clients in a significant way. The second challenge was training our advisors on an asset class that was complex and new to them. Our commercial staff, to a large extent, young and junior, had only experienced a low-rate environment.
With Amundi and its marketing teams, we have designed a bespoke program to develop their skills and accompany the advisors in the marketing of these new products. Last point, which was key for us in the design of these solutions, these structured notes transfer 100% of the cash to LCL's balance sheet. For us, it becomes a true liquidity management tool and a source of funding for the development of our financing activity. To conclude, the structured notes have met a huge success, with close to EUR 4 billion collected since 2022, a source of pride for both LCL and Amundi teams.
So we're talking about capital preservation. I guess the ultimate on that front, albeit not in inflation-adjusted terms, is cash. There was a roaring business in home safes in Germany, I believe, when the ECB was cutting interest rates further and further below zero. Thankfully, there are a lot better alternatives out there now, given the sharp monetary tightening, and also, you know, the general change in the yield environment. Amaury, what sort of growth have we seen in so-called liquidity solutions, which allow clients who have cash to invest to avoid the mark-to-market volatility you flagged earlier, protect their capital, and access the cash as and when they want?
Yeah, the growth has been massive since the ECB started to hike rates in the summer of 2022. There is a strong appetite for this product, thanks to the high level of short-term rates and the inversion of the curve. Good, because we are number one in euro markets. We manage more than EUR 200 billion on those products, and we have done that for 30 years. Our clients are very diverse. Two-thirds are institutional, corporate, insurer, pension funds, and 1/3 is retail, key partner networks, and third distribution. What matters on this strategy is really the stability of the performance, is the liquidity, access to cash whenever you want. Over the last 30 years, we have always delivered a stable performance.
Our clients have always been able to access their cash on a daily basis, even during the great financial crisis or in March 2020. How do we do this? The first thing is, as Vincent said, we have a very high buffer of liquidity, between 20%-25%, way above the regulatory requirement of 7.5%. The second thing is that we have a very thorough analysis of our credit universe and invest only in safe investment-grade bonds. The third thing is that we have a deep analysis as well of the cash flows and the trajectory of our assets on one side, and our liabilities on the other side. And the fourth point is that we have a very diversified portfolio.
So with all this, we have a strong continuum of liquidity solutions for shorter, short-term govies money market funds, short-term triple-A money market funds, standard money market funds, and six-month and 12-month ultra-short-term bond funds. We have the biggest funds in the market in the euro. Our Amundi Liquidity SRI fund is above EUR 50 billion. We have, as well, a desk who originates vis-à-vis and is the contact point for all euro issuers and for all investment banks. It gathers the interest from our portfolio managers, and therefore allowing us to have a big bargaining power and to maximize the new issue premium. It's a unique setup in the market. And fourth, we have a strong sustainability footprint. All our funds are ESG labeled. So with all that, we collected EUR 30 billion in the past year.
Well, that's really impressive. I'd like to ask a follow-up question on that. In light of what Monica said earlier about the turn in the monetary policy cycle and the expectations in the market and at the Amundi Investment Institute of rate cuts to come, do you still see growth coming for this segment?
Yeah, I still see scope for growth. Rates, indeed, most likely have peaked, as Monica said. But let's be clear, we went from 0.5% - to 4% in a matter of 18 months. So even if it has peaked, and our forecast for end of 2024 is 2.75%, we are still with massive positive rates versus historics. And uncertainties about the economic cycle, so cautiousness from our clients. So yes, still strong appetite from our clients on these products. Beyond this market environment, which I think will stay positive for Amundi, there are some specific trends within Amundi, which is, one, we want to develop further of U.S. dollar market share.
Second, on the corporate side, we see more and more corporate clients, traditionally covered by banks, who want to diversify their risk and invest in our money market funds. We have new client acquisitions on the corporate side every week. And third, there is a white labeling activity that is developing. We see clients who want to offer this service to their clients, but who do not have the critical mass to create this service, so they turn to us and want us to deliver this service to these clients, and we do that through white labeling activity. So yes, scope for growth in 2024 in liquidity solutions.
Well, that's positive. So let me move now on to the third area we mentioned, which was diversification, which allows risks to be mitigated but not completely eliminated in the way we've been talking with the capital preservation. Here, we're gonna look at some of the opportunities that fixed income offers to pick up a bit of additional return with limited additional risk, and also explain a little bit about how Amundi has been coming up with ideas for clients to make the most of market moves on this front. Amaury mentioned the inverted yield curve earlier. Laurent, you have an interesting idea that takes advantage of this inverted yield curve in the Treasuries. It was one of the most extreme inversions in about half a century, so I don't think any of us have seen it before.
Could you explain what Amundi came up with to allow clients to take advantage of this moment?
Yeah, sure. Our range of ETF is made of both core building blocks that are here to address a main challenge of our clients in term of strategic asset allocation, as well as products that are designed to cope with specific market situation. Those ETFs are here to enlarge the toolbox of investor to implement their tactical views. You're right, one of the hot topic of the year has been the extreme level of inversion of the U.S. government bond yield curve, and we had to find a way for investors to benefit from this historical discrepancy. As an ETF provider, we wanted to provide a plug-and-play solution, a systematic strategy that helped transforming a theoretical yield differential into an investable ETF.
The ETF we have designed is offering basically a net long exposure to a basket of two-year U.S. Treasuries on one side, and a short exposure to a basket of 10-year U.S. Treasuries on the other side. The two basket has been calibrated in order to be neutral in term of duration, and this calibration help as well to magnify the impact of curve steepening on the performance of our ETF. To make it simple, for each basis point of curve steepening, our ETF is adding 7 basis points of performance. So it's a very simple, cost-efficient way to benefit from a specific market condition, and we have attracted seven hundred billion euros—sorry, we attracted EUR 1.5 billion of net new money on the first semester of the year coming mostly from a wealth manager.
It's worth mentioning that, in these segments, we have nearly no competition, and we succeed to gather more money than the traditional curve players only.
Okay, good to hear. But Sergei, let me turn to you. We've been hearing about one way in which current market conditions lend themselves to diversification, but emerging markets are almost a structural way of diversifying. Would you perhaps talk us through why that is and how you see it?
Yes, absolutely. Emerging markets obviously provides diversification as a diversifying factor for global asset allocators. And let's not forget that it represents, EM fixed income represents 30% of total global debt, of $26 trillion of investable assets. It's a very significant number. It has a compelling historic risk-return profile, and if very low diversification with some other developed market asset classes. And of course, when you look at the emerging market fixed income universe, we have diversification across currencies, having access to hard currencies, euros, dollars, 20 local currency markets, and then geographical diversification is obviously enormous. We invest in over 75 countries within the emerging market space. On top of that, we have access to over 700 emerging market corporate credit. So it's a very significant pool of assets.
I think overall, as Monica was saying, the macroeconomic cycle, the interest rate cycle, monetary policy, inflation is divergent and different in each of these countries. So it's always, I think, useful to have exposure in targeted regions or countries in EM fixed income in any global portfolio as a diversifying factor.
Thank you, Sergei. So another way to get a bit of extra return with very limited risk is back in developed markets and in private debt. So we're gonna hear now from Thierry Vallière, our Head of Private Debt, who's gonna explain why it's an attractive proposition in the current environment.
I believe it's a great time to be a lender, perhaps even an extraordinary one, in the context of what many credit investors have seen over the course of their careers, for many reasons. First of all, total return in private credit market are extremely attractive, especially compared to equities on a risk-adjusted basis, due to, among others, first, enhanced economics. Today, opening spreads, upfront fees, and original issue discounts are above their five- and 10-year average. Second, you have more conservative capital structure, lower leverage, at least one term, lower LTVs, 5%-15%, and higher equity cushions, above 40%. Third, you have improved documentation terms with better call protection, stringent financial covenants, better undertakings and limitations, and reduced EBITDA adjustment. Finally, you benefit from the senior position in the capital structure.
An illustration of that is a real estate financing that we closed two weeks ago in the German hospitality sector. Due to higher rates, valuation of the building has reduced by 12% over the last 18 months. The content of debt provided was also reduced, leading to a conservative LTV below 50%. And finally, to underwrite the transaction, we secure higher upfront fees and better margin. The second reason it is a great time to be a lender is that in this environment, we expect private debt to continue taking market shares from both banks and public market for several reasons. As usual, during difficult times, banks are retrenching from the markets and have reduced their underwriting. Secondly, ongoing market volatility in public markets creates uncertainty of execution and increased dispersion for pricing.
This is likely to continue several times more as limited supply contributes to fuel volatility. Third, sponsors have secured historically high level of dry powder that needs to be invested wisely. There is three times more capital than what is available in the private debt space. An illustration of that is the very important deal flow we have in our corporate and direct lending activity, notably with our impact fund strategies. Year to date, we have sourced 29% more opportunity than last year. This allows us to remain extremely selective, which is critical in this industry if you want to build diversified and resilient portfolios. To conclude, I will say that we are convinced that there are solutions across corporate credit, direct lending, asset-backed finance, and bespoke capital solutions that will benefit from these trends.
So let me now turn to the last of our four topics, yield with impact. As Vincent has underscored earlier, Amundi prides itself on the responsible investment innovations and commitments that it makes. We therefore wanted to give you a flavor of the sort of client trends and demand that we're seeing, as well as some of the ways in which we're helping to grow this segment of the fixed income market. Given the importance of helping emerging and lower-income countries finance the green transition, as we've seen just now in COP, with just coming out of it, it's been great to see an absolute explosion in green bond issuance from these countries in the last few years... And there's huge appetite for such debt as well.
Sergei, let me turn to you to ask you to talk us through some of the trends and also some of the partnerships that Amundi has with multilateral institutions, say, like the one with the IFC, which is part of the World Bank Group.
Indeed, we've seen a very significant growth in sustainable finance within emerging market space. We are a market leader in when it comes to labeled bonds, green bonds, managing the largest emerging market green bond fund, which is $1.4 billion in assets. We see our mission as an asset manager to provide our clients with innovative investment solutions and really to give them access to the market, which is not necessarily very easy to get. We're able to do that because we have very high level of ESG integration and ability to customize various products, whether it's ESG or de-risking of credit risk.
But overall, as you said, absolutely, we see our main role as within the blended finance initiatives, where we combine public money supplied by the multilateral development banks and private money from pension funds and insurance companies. And indeed, we have a number of very large partnerships with multilateral development banks, the IFC, AIIB, EBRD, and EIB as well. And we are launching more sustainable strategies. For example, recently, we launched a $400 million fund on the EM social fund. And our mission as well is to really address both the demand side and the supply side.
So by launching new strategies, we're creating the demand for green and social and sustainable finance within the EM space, but also we see our role as an asset manager to really help the market to grow, to generate green and social sustainable finance within the EM space, and here our participation in technical assistance program with the multiple, multilateral development banks is really, really important. So we will continue to work with, MDBs to, definitely grow the market and to provide our client with innovative investment solutions, whether on the labeled bond side or in sort of Net Zero initiatives and Paris-aligned type of strategies.
Amaury, let me turn to you. What about the developed markets?
Well, demand from retail and institution is on impact funds and on Net Zero strategies. On impact funds, green is taking the lead. Good, because we are a leader. We invest EUR 30 billion in green bonds, and our impact green bond fund, our flagship, has increased its AUM by 70% this year. Thanks to ALTO Sustainability, powered by Amundi Technology, we are able to monitor real time our carbon footprint, our carbon intensity, and the temperature of all our issuers in portfolio and the whole portfolio. This is a key differentiator. Since 2022, we have increased, and we have seen inflows of EUR 4 billion in those green strategies. On Net Zero, we support our institutional clients who want to transform their portfolio into a Net Zero and be aligned with Paris Agreements.
So a lot of growing opportunities, especially in this Net Zero space, with our clients.
Okay, great. Well, I think, Laurent, you had... I, I noticed you had something you wanted to chip in with there.
On the ETF side, we have developed a comprehensive range of fixed income ESG ETF in the corporate bond space. However, responsible investments in the sovereign space is more challenging. Indeed, sovereign issuer are more complex to assess from a sustainable standpoint, and the traditional techniques on ESG integration, like filters, exclusions, reweightings, are no more viable to build a sovereign sustainable portfolio. So we have to think differently, and the challenges for us is to shift a core building block toward sustainability without distortion of a standard risk metrics duration country allocation. Fortunately, there is a more comprehensive approach, I would say, of sustainable investments in the fixed income space, thanks to the green bond market.
But green bond market, as a pure play, is convenient for investors that are strongly committed to act on climate and that do not add any major risk limits. So our solution has been the creation of a new SFDR Article 8 Euro government bond ETF, which includes 30% of green bond issued by sovereign issuers, and that, that are selected to match the main risk characteristics of a standard Euro government bond index. It's a quite efficient way to add a climate dimension into a core building blocks, and we succeeded to attract more than EUR 700 million of net new assets on the three first months after launch, and this week, all products have reached the 2 billion euros AUM threshold.
Thank you. Let me throw this open to perhaps Amaury and you, Sergei. How is supply and demand for green bonds being affected by, say, the regulatory flux that we're seeing, a dearth of global standards and perhaps some data issues? And could you also perhaps talk us through how Amundi is trying to find solutions and help the way out of this?
Yeah, well, we are very involved in the development of the green bond market with issuers, with investors, and, and with data provider.... And as a matter of fact, our head of responsible investment for fixed income, Alban de Faÿ, is the vice chairman of the executive committee of the Green Bond Principles by ICMA, the International Capital Market Association, is, is there to set up the standard and the best practices of the green bond market.
Thank you, Amaury. This is really important for emerging as well. Sergei, what are you-
Absolutely. Well, as I mentioned earlier, with our role in our participation in the technical assistance programs run by the various multilateral development banks, who are really at the forefront of setting the standards for labeled bonds within emerging markets, is extremely important. So we're seeing, as you said, you know, multiple standards across EM space, across developed market space. Some of the taxonomies, for example, you know, we believe are very, very good. For example, the EU taxonomy. Clearly, the development of emerging market standards is somewhat slower, but we are seeing steady convergence towards, you know, good global standards, such as EU taxonomy going forward.
Fantastic. We've been talking about green bonds, but responsible investing encompasses so much more. Vincent mentioned social bonds earlier, and I think you've all sort of... Sergei, you touched on it as well in one of the instances, we've been involved in. What are the trends, Amaury, perhaps I could ask you, are on social bonds, and how do you see this segment of the market developing?
Well, first of all, I want to say that at Amundi, we believe that the energy transition will be successful only if it's socially just. So yes, social bonds is a key strategy among our impact funds. We are launched as well, very early, one of the first social bond funds in 2020, and it has attracted very good money into these funds. What we see as well as a trend is our investors are looking more and more on mixing green, social, and sustainable bonds together into what is called GSS strategies, and we see very, very good traction on this strategy.
Oh, fantastic. Well, unfortunately, we're nearly out of time. I'm going to end with a very quick-fire round of questions, the same question to all of you. What is the fixed income trend or strategy that you're most excited about in, say, a one, two-year horizon? Laurent, I'm going to put you on the spot first. Go for it.
I will first start to answer with the whole range of ESG fixed income ETF, but probably excitement is much more on the Euro Govies green bond ETF product I've just mentioned, because we are seeing a very strong momentum in terms of inflows. And additionally, I'm convinced that the government bond pool of assets is the largest one that still need to be transitioned towards climate-friendly solutions. So there are plenty of room for further growth on such innovative products.
Sergei, what about you?
I'm very constructive, actually, across a number of strategies in EM space, both on a hard currency and local currency. The really due to the significant turnaround in macroeconomic backdrop and interest rates, certainly in the developed markets with the Fed pivot. If I had to choose one, I think for next year, and Monica mentioned that we probably are going to have very significant monetary policy easing across a number of emerging market economies, especially in Latin America and Central Eastern Europe, which I think will provide very significant absolute returns in the local currency strategy for 2024.
Thank you. Amaury, you get the last word. Go for it.
Yeah, well, after the strong repricing of 2022, we advised our clients to allocate more and more into fixed income. That's what we call bonds are back. While in 2023, they mostly went for short-term solutions because of the volatility of the market, we had Treasuries 10-year ranging from 3.3%-5%, and because of the inversion of the curve. Well, in 2024, we believe that we're entering a new monetary phase and that the tightening cycle is being reversed. So we think that now the clients need to go for capital gains, need to go for duration, because we will see the rates going down in 2024. And we will see as well a pretty uncertain economic environment, so slightly cautious approach. So in this context, I will go for Global Aggregate strategies that are run actually downstairs with our team.
Global Aggregate strategies, because five-year duration, one, because it's a very wide universal investment, still able to, let's say, take opportunities of the various credit and monetary cycles around the world, and it is naturally skewed towards high-grade investments, safe investments, and as well as the flexibility to, navigate between risk-on and risk-off strategies, given the universe, of investments. So yes, my pick would be Global Aggregate strategies.
Thank you, Amaury. In fact, thank you, all three of you, for your insights. Sergei, Amaury, and Laurent will be available to take your questions in the Q&A section that's coming up shortly, or of course, for those of you in the room, over lunch. I'm going to hand over back to Cyril now, who will talk you through.
Yes, thank you, to our panel, Amaury, Sergei, Laurent, Swaha, of course. And I hope that you are convinced now that we have been able to seize the many opportunities we've seen in the fixed income market, in the past 18 months, and that we have very prospective and very attractive outlook for the coming years. I think just to wrap up, this series of presentations about specific strategies and specific products or specific expertise, it was good to have kind of group view, overall view of what we can provide to clients, and especially one in the institutional space and one as a group of clients in one given country.
So we will have Florence Barjou, the Chief Investment Officer of Crédit Agricole Assurances, who is, as you saw with Amaury, a very large client in the institutional space. And in Spain, where we've been expanding quite significantly in the past years with Marta Marín, who's the Head of Amundi Iberia. We can start with the video.
Good morning. Crédit Agricole Assurances and Amundi are sister companies within Crédit Agricole Group, and, they have been very close partners since the creation of Predica in the mid eighties. Our partnership is built on the successful combination of complementary skills, and both companies have become leaders in their respective industries in Europe. For us, this means that Amundi has a unique understanding-