2011 saw a slight contraction in the number of funds for only the second time in the past decade, according to Lipper’s latest annual European Fund Market Review.
The industry has grown by 74% over the past ten years, with nearly half of industry assets (46%) now in funds launched over the past decade (made up of 24% launched in the first five years and 22% launched in the most recent five years).
The past ten years has seen a changing ‘balance of power’ in the European industry away from those funds primarily sold into one market and towards cross-border products (i.e. generating sales from multiple markets). The share of assets in the latter has risen from 21% at the end of 2001 to 43% at the end of 2011.
A closer look at cross-border funds reveals that the proportion of assets in the lowest risk funds has stayed stable, while higher risk products have seen a significant rise in assets over the last decade. Global and emerging market funds (both bonds and equities) have been the main winners here.
ETFs make up 7.8% of equity fund assets in Europe and when this total is combined with traditional index tracking funds, passively managed products make up 16.8% of the total. This is a rise from 8.8% at the end of 2006 and 5.5% at the end of 2001, when ETFs had only just arrived on European shores.
Ed Moisson (pictured), Head of UK and Cross-border Research at Lipper, says: “2011 was only the second year in the past decade that the European funds industry suffered net outflows. Clearly the pressure is on fund management companies with international ambitions to really understand which products will be well received and in which markets.”