European cross-border fund management, as an industry, has a number of tailwinds supporting its growth.
Rising middle-class populations in emerging economies are creating a larger pool of potential investors to whom firms can increase their distribution footprint by offering them European-domiciled funds that are regulated by the EU’s advanced regulatory regime, namely “Ucits” funds for traditional investments, and the “AIFMD” for more sophisticated investments, such as hedge funds and private-markets.
The widespread adoption of digital platforms is further democratising access to investment funds across the globe and there is also the growing emphasis on long-term financial planning and retirement savings, which provides a secular demand for investment funds.
ESG, meanwhile, is another more recent boon for the industry.
But with the increase in passive investment over recent years, competition for assets under management for active managers has become intense. Greater allocations to private markets increase that competition for asset management firms with public equity businesses.
Further, cross-border investment managers in Europe have seen intense fee compression, which - combined with heavier regulatory scrutiny and costs – has caused a drag on expansion.
Yet some firms do continue to see growth in their European-domiciled businesses. Funds Europe has partnered with Monterey Insight, a leading provider of data for the cross-border, EU (inc. UK) asset management industry, to recognise growth leaders.