Broadridge Financial Solutions latest European study ‘Distribution 360’ has revealed growing opportunities for asset managers selling in Europe. Despite increased complexity and disruptions in the region’s fund markets, Europe’s pool of accessible assets has reached €3.4trn.
The study offers asset managers an independent guide to the European fund landscape, navigating firms to accessible opportunities as well as revealing the relative importance of different distribution channels from country to country – critical knowledge for firms defining or honing their European distribution strategy.
The key findings from the study include:
The European opportunity is enormous and growing. The market that independent asset managers can realistically address is estimated to be €3.4trn – up 17% on 2016, thanks to a combination of rocketing sales and asset growth. Growth was registered in all key European markets.
The top-five markets by accessible assets are UK, Italy, Switzerland, Germany and France. European savers maintain very high allocations to cash with only 9% of Eurozone households owning a mutual fund despite compelling reasons to invest in funds at present.
One size doesn’t fit all. Europe’s core fund markets exhibit disparate characteristics in terms of product preferences, distribution channels, selector behaviour and – crucially – openness to cross-border products.
Europe’s distribution landscape is moving towards its most important phase of development, a phase that will be characterised by a greater focus on asset managers’ marketing, service and brand characteristics – the key elements of differentiation, rather than simply product.
Usage of sub-advisory arrangements continues to blossom, with core equity or flexible mixed asset strategies the primary areas of activity.
Mark McFee, director of Broadridge EMEA Insights said: “Europe continues to represent a great opportunity, and regulatory initiatives such as the Capital Markets Union (CMU) and the Pan-European Pension Plan (PEPP) could boost the uptake of third-party funds.”
“But anyone serious about tapping these opportunities needs to understand what is driving change in the distribution landscape as a whole, and what makes each market tick. The markets that appear most attractive on first glance can represent significant challenges too, be it due to a strong bias towards locally domiciled products, for example in the UK, a highly competitive environment in terms of the sheer number of groups present, such as in Germany, or relatively short fund holding periods, as is the case in Italy.”
The report’s analysis is based on MackayWilliams’ proprietary ‘accessible assets’ data. The completion of this research follows Broadridge’s recent acquisition of MackayWilliams, which extends Broadridge’s ability to offer clients a combined view of global institutional and retail data analytics with qualitative insights into the global funds industry.
It is based on data that estimates the portion of the European market that can realistically be addressed by third-party asset managers. This combines top-down market data with in-depth research into fund-selector views and behaviour to assess the degree to which markets and distribution channels are open to independent product offerings.