Morningstar has published its European Asset Manager Pulse, writing that it highlights the seismic shifts reshaping the asset management landscape.
Key highlights from the European report include:
Private market growth:
Private equity now accounts for 39 per cent of private markets, with ongoing consolidation enabling leading private market players to scale further and access untapped opportunities.
Private credit is gaining traction as stricter banking regulations limit traditional lending, creating demand for alternative financing solutions for growth companies and non-standard cases. Additionally, the growing acceptance of private credit as a financing alternative is fuelling expansion.
Real estate, infrastructure, and renewable energy investments are booming, fuelled by sustainability initiatives, digital transformation, and increasing demand for data centres.
The secondaries market is expanding, improving liquidity and efficiency in private markets by enabling more active trading of private assets.
Opportunities for asset managers: Large cash holdings and low allocation to growth assets among European households are creating long-term pension risks—yet they also represent a major untapped opportunity for asset managers.
Consolidation trends: With recent high-profile mergers, such as BNP Paribas acquiring AXA Investment, the European asset management industry is rapidly consolidating. This is paving the way for scale advantages amid growing competition. Our analysis shows that mergers done only for scale often fail to deliver the promised synergies.
Megafunds and concentrated private markets: The rise of European megafunds, bolstered by North American commitments and competitive management fees, is creating a concentrated power dynamic. Investors are increasingly drawn to private equity firms with comprehensive strategies and proven track records, streamlining due diligence processes and relationships.
Leveraged loans and refinancing challenges: A staggering EUR160 billion of loans require refinancing in the next four years—a critical turning point for both private equity and private credit. Lower interest rates will play a key role, but economic stress could alter the narrative.
Performance advantages of private equity: Private equity firms benefit from diverse returns, proprietary access to investments, and robust asset-owner relationships, distinguishing them from their traditional counterparts.
Morningstar writes that it views only four of the top 40 European Fund Managers as independent: Schroders; M&G; Abrdn; Robeco. The rest are controlled by European banks, insurers or international firms, the firm writes.
Johann Scholtz, Senior Equity Analyst at Morningstar, says: “The dynamics within Europe’s asset management industry are undergoing a profound shift. An increasing focus on private markets, coupled with the rising dominance of megafunds and the urgency to address pension shortfalls, creates opportunities for firms to strengthen their competitive positioning. Forward-looking players who act now are well-placed to capture untapped growth.”
