With assets under management standing at €19trn at the end of 2014 (investment funds + discretionary mandates), the European asset management industry has reached a peak.
If it is too early yet to claim 2015 will break the record since most managers have faced losses in assets with last August’s market turmoil, the European fund and asset management association (Efama) remains positive.
During a recent press briefing in London, Efama commented the European AM industry’s results from half year. Since the financial crisis of 2007-2008, total net assets of European investment funds have more than doubled, passing from €6.17trn in 2008 to €12.63trn as at June 2015.
Efama’s director general Peter De Proft said ever more assets are being recorded primarily because investment funds provide returns compared to other financial products in the current environment.
As of June 2015, Efama tallies 29,276 Ucits funds against 26,783 alternative investment funds (AIFs) available in Europe. The Ucits market accounted for €8.17trn of the European investment funds’ total assets (65%) against €4.46trn for the AIFs.
“Ucits is now a global brand,” De Proft explained while highlighting the importance of the sales of cross-border Ucits in the Ucits market growth. Among other factors that can explain the market growth, Efama lists the move towards guided/open architecture and the growing importance of fund platforms for the distribution of third-party funds.
Efama supports very actively in the establishment of a capital markets union which would be the best solution to efficiently implement Mifid II’s rules according to the association.
Mifid II is to impact deeply the asset management industry in many ways by 1 January 2017. Efama highlighted Mifid II was dense and that its absorption by the industry may require a deferral in its implementation. The association wants to ensure that the industry will be given sufficient time to apply Mifid II as well as Ucits V rules.
Recently, JWG, a specialist publisher and solutions provider around financial regulation, has found out managers’ response to Mifid II would require some 750,000 paragraphs of text.
Efama’s vice-president William Nott pointed out Mifid II being implemented as a directive could lead to some gold-plating by local regulators following their interpretation of Mifid II’s texts and therefore to a risk of fragmentation of the European asset management industry.
The establishment of a capital markets union would also serve the launch of new investment opportunities like a pan-European personal pension product, whose main purposes would be to increase choices for EU citizens’ retirement savings and to trigger a shift of retail savings into capital markets.
Efama’s president Alexander Schindler explained this product should form an alternative to current solutions existing in local pensions markets. He assessed it would attract young generation that move across Europe.
Schindler pinpointed as well a “substantial need” to finance infrastructure in Europe. “Almost €1trn will be required for infrastructure investment by 2020,” he said.
The association supports the implementation of European long-term investment funds (Eltifs) to finance infrastructure investment. Schindler added this project could be achieved over the two coming years.