European fund universe shrinks

coins_in_squeeze_410The universe of funds available for sale in Europe declined by 390 this year, according to Lipper, as asset managers are preparing for Ucits IV and rationalising their product ranges.

Lipper’s latest Fund Market Insight Report shows the number of 2,383 new launches was offset by 1,513 fund closures and 1,260 fund mergers.

Ongoing rationalisation of fund families and the Ucits IV directive are likely to cause the European mutual fund universe to shrink further.

Lipper registered 35,017 funds for sale in Europe at the end of the third quarter: 37% were equity funds, 23% mixed assets and 18% bond funds.

Of those 2,383 funds that were launched during the same time, 791 were equity funds, 481 bond funds, 524 mixed asset funds.

On the other hand, of those 1,513 that were liquidated, 434 were equity funds, 270 bond funds and 232 mixed asset funds.

Lipper predicts the coming months to be “challenging” for the European mutual fund market.

“The debt crisis in Europe creates uncertainties on the market and fund companies are taking a cautious approach in their development strategies,” the report says. “Indeed, revenue in the industry is strongly related to assets under management which is itself a consequence of fund flows and performance.”

Lipper says because markets are feeling the impact of the crisis, revenue for the industry is likely to decline further.

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