Half of European asset managers received no net fund inflows in the three years to July 2013 as the lion's share went to a handful of firms.
A preference for certain asset classes helps explain why a small group of managers picked up net assets, says Fitch, a ratings agency, which carried out research.
The findings come as the European Fund and Asset Management Association publishes figures that show worldwide net inflows to funds have plunged.
However, despite the Fitch finding of highly concentrated flows, fund inflows in the European asset management sector have revived.
Assets under management across Europe grew 12% to nearly €16 trillion in the 12 months to June 2013. Market movements accounted for three-quarters of this growth.
Prior to June 2012, the industry suffered 18 months of volatile market performance in which total assets under management remained steady at €14 trillion.
Investors returning to market are specific about what they want. In 2012, credit accounted for 78% of net inflows, says Fitch. So far this year, 86% of net flows have gone to global bonds, global equities and multi-asset funds.
Meanwhile, inflows into domestic funds have been stable or even declined since 2009, with cross-border funds taking all the net gains.
Fitch says the preference for certain asset classes helps explain why a handful of asset managers have enjoyed the lion's share of fund inflows. In the three years to July 2013, the top ten firms received half of all net inflows into bonds and 75% of inflows into equities.
Fitch says European asset managers will have to battle to gain market share in the coming months.
“Competition is likely to intensify,” says Fitch in a report. “Unlike other regions of the world, the European market is characterised by its relative openness to foreign players, essentially US based managers. New entrants regularly penetrate the market, attracted by the efficiency and simplicity of the Ucits framework, be they US or more recently Asian or Latam [Latin America] based.”
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