By Mathieu Rosemain

PARIS, Feb 3 (Reuters) - Europe's largest asset manager, Amundi, on Tuesday reported higher-than-expected net inflows in the fourth-quarter, and the CEO said clients were seeking diversification in Europe and away from the U.S. dollar.

The Paris-based company said investors added 20.9 billion euros ($24.6 billion) more than they withdrew in the three months to end-December, with strong demand for its passive products. The net inflows exceeded analyst expectations of 16.1 billion euros, according to a company-compiled consensus.    

Amundi's assets under management (AUM) rose 6.2% year-on-year to 2.38 trillion euros ($2.80 trillion), slightly above the 2.365 trillion euros analysts had forecast.    

The Credit Agricole majority-owned firm has established itself as one of the biggest players in Europe's Exchange-Traded Funds (ETFs) market, where it competes with U.S. giants including BlackRock and State Street.

But Amundi remains far smaller than the biggest U.S. names and its shares have underperformed in recent years. BlackRock said this month its assets under management had hit $14 trillion.

Amundi is now trying to expand into fast-growing private markets such as private credit and infrastructure, last year announcing an investment in UK alternative asset manager ICG, part of a 2025-2028 plan that targets more than 300 billion euros of cumulative net inflows, with half expected from Asia.

CLIENTS TURN TO GOLD TO DIVERSIFY

In a call with reporters, CEO Valerie Baudson said geopolitical uncertainty has driven investors to diversify their portfolios across styles, sectors and regions.    

Baudson noted that the significant decline in the dollar had influenced investment decisions regarding American assets, with clients initially turning to gold for diversification.    

"We've begun to see a whole series of investments in Europe that were truly diversification investments or investments designed to reduce sensitivity to the dollar and U.S. assets," she said.

Analysts remain concerned about Amundi will hold on to a distribution agreement with Italian bank UniCredit, set to expire in July 2027.

"The situation hasn't changed; (the contract) may or may not be renewed," Baudson said, adding that Amundi managed 86 billion euros worth of assets under the UniCredit distribution contract at end-2025.

Amundi's fourth-quarter adjusted net sales climbed 8.2% year-on-year to 899 million euros, above expectations. Full-year 2025 profit came in at 1.59 billion euros, up 22% on 2024.

The asset manager proposed a dividend of 4.25 euros per share for 2025 and announced a 500 million euro share buyback.

($1 = 0.8483 euros)

(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes)