Europe’s ESG struggles revealed in Broadridge’s top fund brands study

The latest edition of Broadridge’s Fund Brand 50 annual research study has revealed the world’s best-performing third-party asset management brands.

As per the research, European investors favoured bank savings accounts and money market funds, “putting a squeeze” on the asset management industry. With global growth slowing, the researchers suggested that fund groups must leverage their strengths and brand attributes to compete in an oversaturated market facing unsustainable competition.

“In a year that saw passive managers gain further momentum, Vanguard moves into the top-10 brand rankings, scoring highly as a key international player and for its solidity,” said Barbara Wall, director of global distribution insights, Broadridge.

“Fellow passive specialist iShares also moves up the league table from eighth place to sixth, unseating Robeco, although the Dutch active manager maintains pole position for its ESG credentials. The passive trend is further evidenced by the entry of Xtrackers into the top 50, with the firm’s range of sectoral and thematic ETFs proving popular with fund selectors,” added Wall.

ESG – flash in the pan, or here to stay?

The top five global brands, led by BlackRock, dominated with substantial assets under management and operational scale. While these top positions remain stable, there’s notable movement within the top 10.

The broader top-50 list encompasses a diverse range of companies, including niche specialists and major one-stop-shop providers, favoured by selectors.

In 2023, ESG faced challenges in Europe due to transparency issues, poor performance, and regulatory pressures. Despite this, ESG remains a significant consideration in investment decisions. According to the study, asset managers are under increased scrutiny to validate their ESG credentials, prompting calls for standardised vocabulary and improved communication.

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Brands strongly linked to ESG, like Robeco and Liontrust, saw their scores decline, indicating a shift in investor sentiment. Further regulation may not necessarily aid the ESG cause, according to Broadridge’s fund selector interviews.

In Europe, the top-five attributes saw subtle shifts, with ‘appealing investment strategy’ taking precedence over ‘client-oriented thinking.’ Fund launch activity slowed as firms prioritised cost-cutting, with ‘solidity’ gaining importance over ‘innovation/adaptation to market change.’
Effective communication is crucial, with ‘keeping best informed’ rising to third place, the results showed. Proactive communication during periods of underperformance is particularly valued by selectors.

Additionally, the study found that ESG’s influence has diminished, but 50% of the top-10 brands still excel in this area. Amundi stood out for its sustainable investments, including climate-neutral ETFs.
Schroders’ expansion into private markets helped mitigate criticism, allowing the firm to maintain its brand position.
Fixed income performed well amidst market challenges, with Pimco rejoining the top 10 due to its strength in this space.
A risk-averse European climate favoured passive specialists, although active ETFs are gaining traction, comprising about 5% of Europe’s total ETF intake in 2023.

The study, in its 13th year, ranks asset managers based on fund selector perceptions across 10 brand attributes, unveiling top global and regional brands in Europe, APAC and the US.



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