Europe's fund range continues to shrink

Euro_equities_declineThe number of funds registered for sale in Europe shrank again in the first quarter as mergers and consolidations outweighed an unusually small number of fund launches, according to data firm Lipper.

Asset managers registered 506 new funds in the three months – almost half the number launched in the first quarter of 2008 and fewer than were launched in any first quarter since.

In the same period, there were 493 liquidations and 205 mergers, leading to a decline of 192 funds on sale in Europe, equivalent to the market shrinking by 0.6%.

The first-quarter decline continues a trend seen in 2011, when funds fell by 722 over the course of the year, equivalent to a 2% decline.

Lipper said the fall in funds may be caused by asset managers reducing their costs by consolidating fund ranges. As in its previous reports, the firm identified regulation as a source of cost pressure. In April, Lipper pointed to administrative costs linked to Ucits IV regulation, such as the requirement to produce Key Investor Information Documents for all products.

Another challenge for asset managers has been market volatility linked to factors such as the eurozone crisis, which has eroded investor confidence and led to outflows in many products.

“The coming months could still be challenging for the European mutual fund market, especially if the European debt crisis leads to uncertainty in the markets,” said Lipper's report.

Worries about Greece's place in the eurozone and the viability of a stimulus plan proposed by the new French president, François Hollande, are two of the main questions that must be answered, it said.

©2012 funds europe