United Kingdom (UK)
Overview: Largest asset management hub in Europe and second largest in the world after the US. 79% of assets managed for institutional investors. Pension schemes are the largest client type. Relatively unconcentrated.
Trends: Global diversification of asset allocation, passive investment staying strong, interest in private markets from pension schemes and insurance companies, sustainable investments (institutional driven but retail investors are catching up), D&I, technology.
Distribution: The distribution of retail funds in the UK remains heavily intermediate.
Challenges:
- Adapting and maintaining competitive advantage post-BREXIT
- Embracing technological change
- Transforming the operating culture
- Sustainability
Germany
Overview: Strong pillar of the European asset management industry with €3tn AUM. The four largest local players dominate the market (70%). Foreign and independent players face tough competition from banking and insurance firms.
Trends: ETFs both in the institutional and retail sectors, thematic equity funds, multi-asset funds (balanced and absolute-return strategies, especially among IFAs), sustainable, real asset & private markets investing, increasing institutional investments into funds.
Distribution: More than two-thirds of German insurance assets are life insurance assets. Conservative investors but growing interest in alts. IFAs and asset managers have a profitable relationship.
Challenges:
- Corporate governance
France
Overview: Third largest asset management hub in Europe with €1.9tn AUM. More than half of assets managed are for institutional investors. Strong focus on socially responsible investment.
Trends: Interest in passive investment and ETFs, growth in real asset and private market investing, increasing focus on ESG factors, digitalization, and innovation.
Distribution: French retail investors mainly access investment funds via life insurance policies or banking networks. Independent financial advisors (IFAs) have gained ground in the retail distribution of funds.
Challenges:
- Increased competition from foreign players
- Regulatory pressure
Switzerland
Overview: Most competitive financial center worldwide with a unique position in the global funds industry. Flexible & pragmatic regulations, political stability. Global leader in cross-border wealth management (25% market share). AUM CHF2.7tn, 33% abroad (end 2020).
Trends: Renowned for sophisticated strategies (21% in alts), pioneer in sustainable finance (integration, offering, procedures, disclosures), high digitalization is a priority.
Distribution: Two major financial centers. Highly competitive market split between local fund providers and several foreign competitors. Bank-owned asset managers. Synergies between different areas of the banking sector.
Challenges:
- Customer acquisition
- Competition from Asian rivals
Italy
Overview: Historical record of €2.5tn AUM (03/21). Saving culture – a compelling prospect for fund managers. Low-risk seekers, poorly financially educated, prefer safer financial instruments. Mutual funds’ growth due to macroeconomic environment, diversification, and professional competence.
Trends: Multi-asset products have overtaken traditional funds, introduction of tax-free PIRs (ISAs) is attracting new money to the industry.
Distribution: Dominated by banks. Relationship asset manager and distributor is mainly captive. Loss of faith in local banks, diversification of offering, technical competence, and a trust-based relationship with distributors are favoring asset managers.
Challenges:
- MiFID II changing the dynamics of financial advice
- Saturation of product market in Europe (too many funds)
