A combination of strong financial markets, industry consolidation and net fund inflows has helped bolster total management fees for Europe’s asset managers in the second half of last year, according to a new report from Moody’s Investors Service.
The report, ‘Asset Management – Europe Fee revenue up on M&A, markets, and fund inflows’, finds that total management fees across the surveyed group rose 12.7 per cent in H2 2017 compared with end-June 2017. Excluding M&A transactions, Moody’s estimates that overall fee revenue increased by 6 per cent.
“About half of the increase in fees we recorded was due to the acquisition of asset managers previously outside of Moody’s surveyed group, for example the Janus-Henderson merger and the acquisition of Pioneer by Amundi,” says Marina Cremonese (pictured), a Vice President and Senior Analyst at Moody’s. “However, the other half is down to market appreciation, higher performance fees, as well as positive net flows.”
Bank-owned asset managers recorded the increase in total largest management fees, as their fees rose 18 per cent, as the group continues to benefit from the banks’ extensive distribution networks. These also provide some insulation against fee pressure, despite a change in the asset mix towards passive strategies, which typically generate lower fees.
Sales momentum continued for the surveyed group during the period, with net inflows reaching EUR135 billion, equivalent to 1.5 per cent of assets under management at the beginning of the period. This compares with net inflows of EUR30 billion in H2 2016. Only three of the 21 managers surveyed reported net outflows in H2 2017.