Alfi calls for asset managers to broaden their appeal to all savers
“Beyond 10%”, a new report launched by Alfi, sets out actions for the industry to enlarge the pool of retail investors in long-term investments.
The Association of the Luxembourg Fund Industry (Alfi) has unveiled a new report which looks at the impact of the financial crisis on European investor behaviour, and at the future direction of the asset management industry.
The report “Beyond 10%: the case for enlarging the pool of retail investors in Europe’s investment funds,” was conducted by research company MackayWilliams and revealeed a €4 trillion pool of unmanaged household assets in Europe, which is either losing value or failing to grasp growth opportunities that are available through long-term investment vehicles.
“The clear conclusion of the report is that there is a huge amount of cash on deposit – an amount that is actually bigger than the household wealth in South America – which would benefit from being in investment vehicles, but to capture these unmanaged assets fund groups need to look beyond the wealthiest 10%,” commented Marc Saluzzi, chairman of Alfi.
“Focusing on the wider needs of general investors and taking action to increase their allocation towards mutual funds has benefits for both the industry and investors – and will improve the perception of the industry.”
The report examined the changing behaviour of European investors since the financial crisis, which has resulted in household assets in mutual fund assets shrinking from €1.7trn to €1.2trn between 2006 and 2011. This contrasts with the US, where mutual funds of households rose by 8% during the same period. In Europe cash now accounts for 42% of household wealth, in contrast to the US where the equivalent percentage of cash holdings is 18%.
The analysis shows that, despite news headlines about market turmoil and poor equity performance, over the past decade European household assets (excluding pensions and insurance) achieved a return of 34% whereas US households, with their greater weighting of long term investments, achieved a return of 47%.
Click here to read full report.