Fund launches drop 50% since 2011

Arrow down1Fund launches in Europe have fallen by 50% since 2011, with the first quarter (Q1) of this year showing the lowest level of new funds in the last five years.

A total of 399 funds were launched in Europe during Q1 2015 – half the peak number launched in 2011 and a decrease of a quarter compared with Q1 2014, according to Lipper.

A reason for this may be that there is less pressure on single funds to perform due to higher assets under management (AUM), says Lipper in its latest Launches, Liquidations & Mergers in the European Mutual Fund Industry: Q1 2015 report.

Besides the slowdown in launches, a total of 581 funds were also removed from the market through liquidations or mergers, though the number was lower than in previous years. Liquidations dropped 11% from Q1 2014, while the number of fund mergers declined 26%. Both of these figures represent the lowest numbers recorded in the five years since 2011.

Equity funds dominated Europe at the end of the first quarter, making up 37% of the 32,040 funds available for sale, but they also saw the greatest number of liquidations with 108 closures.

Lipper says the overall reduction in activity in the European fund industry could be down to record net inflows during Q1 2015, as higher AUM lead to higher income streams and therefore less pressure on the profitability of single funds within the product ranges.

The report identifies funds using dividend strategies as an area to watch, as more than every fourth euro that was invested in equity funds in 2014 went to a fund that uses a dividend strategy.

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