The UK
Overview: The largest asset management hub in Europe and the second-largest in the world, after the US. 79% of assets are managed on the behalf of institutional investors. Of these institutional investors, pension schemes are the largest client type. The industry is relatively unconcentrated.
Trends: The global diversification of asset allocation, passive investment strategies staying strong, interest in private markets from pension schemes and insurance companies, sustainable investment (which is driven by institutions, but retail investors are catching up), D&I and 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)
