Eurozone crisis takes toll on mutual fund numbers

More European mutual funds were either shut down or merged last quarter than funds launched, as the eurozone’s uncertain outlook took its toll.

Last quarter 556 funds were launched, while 408 were shut down and 269 were merged, largely as a result of Ucits IV provisions.

Overall this produced a net decrease of 121 funds in Europe.

The number of funds being launched grew by 10% from the first quarter of 2011, while the number of merged funds was up 17%, and the number of funds closed down last quarter fell by 4%.

This year to 30 September the most launched, and also most liquidated, category of funds was equities,

Europeans have a dizzying array of 35,017 funds to choose from, 390 fewer than at the start of this year.

Dunny Moonesawmy, head of Western Europe and Middle East research at Lipper, source of the statistics, said more mergers were likely in coming months, as the crisis takes its toll.

“The coming months would be challenging for the European mutual fund market. The debt crisis in Europe creates uncertainties on the market, and fund companies are taking a cautious approach in their development strategies.

“As markets have been hurt by the crisis, revenue for the industry is expected to decline [and] fund management companies would increase the process of rationalising their fund ranges which, coupled with the Ucits IV Directive, should lead to an increase in the number of merged funds in the next few months.”

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