Asset Management is an important industry in Belgium. With €224 billion of assets under management, 62% of the the country's GDP, it is the fourth largest in Europe.
Our industry has been impacted by the global economic crisis, the peripheral country crisis and the financial sector debt crisis – not to mention market volatility.
In 2008 and 2011, we saw massive drops in assets under management. Assets of funds marketed plunged from a record high of €174 billion as at the end of 2006 to an all-time low of €104 billion as at the end of 2011. Since then, the market has consolidated, ending last year at €106.5 billion.
If the trend is understandable, the extent of the drop is less so. Between 2001 and 2006, the Belgian fund market and the European market as a whole experienced a similar trend. Since 2006, and especially 2008, we have been seeing a major downturn of our national market.
Belgium has failed to benefit from the spectacular rise of the rest of Europe, in particular in 2009 and 2010. While the European market has risen by 45% since late 2008, that in Belgium has fallen by 10%.
This discrepancy can be explained by a series of factors.
Belgium suffered more than any of the other core European countries from the banking sector crisis. Liquidity issues compelled main distributors to advise clients to opt for balance sheet products rather than off-balance sheet products.
As things stand, the situation seems to have been resolved in the case of most of the banks present on the Belgian market.
Not only are they beginning to look like their old selves; they seek to further diversify their product mix in an effort to offer their clients value-added products and to increase profitability. This change is promising and will give our business a boost in the years to come.
Fiscality also impacted on the changes on the Belgian fund market. In 2006 and 2008, national fiscal measures impacting the bond funds in particular rocked this market.
The changes linked to national implementation of the Financial Transaction Tax are also of great importance.
The Belgian Asset Managers Association and the sector it represents is doing its utmost to implement a level fiscal playing field, with respect to the different European countries and types of investment product themselves: investors have to be able to choose the product that best meets their risk profile and needs, irrespective of its fiscal features.
Finally, the Belgian fund market has, historically, been highly orientated towards funds with capital protection. Numerous products are coming to maturity and the particularly low interest rate terms are preventing banks from offering attractive conditions to clients, who have been tempted to redirect their investments to this product segment.
Thus, the sector – creative and innovative as it is – is offering other products that guarantee investors a certain degree of capital protection: constant proportion portfolio insurance-type funds, absolute return funds, funds with downside risk control or even intelligent-benchmark funds.
At the same time, the regulatory framework, which continues to grow, is impacting our business at all points of the production chain, the aim being to ensure enhanced control of the financial sector and to better protect the investor. This regulatory framework should also boost the development of our industry.
Accordingly, we have been keeping a close watch on the Ucits IV legislation, the key investor information document, early drafts of Ucits V, the Markets in Financial Instruments Directive and Packaged Retail Investment Products Directives, not forgetting the Alternative Investment Fund Managers Directive.
With all the regulation, we must ensure the application of level playing field principles among the different types of investment product and countries.
Myriam Vanneste is president at the Belgian Asset Managers Association
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