Forty per cent of UK-domiciled assets under management are held on behalf of clients based overseas, according to new statistics published by the European Fund and Asset Management Association (EFAMA).
EFAMA has published today the 11th edition of its annual Asset Management Report, highlighting that pre-Brexit it is clear just how reliant the UK is on overseas investment. The UK's dependency is different to most European countries, where the asset management industry serves predominantly domestic clients, the research highlights.
Three countries hold a significant market share in assets under management in Europe: the UK (37%), France (17%) and Germany (9%). These high market shares reflect the size of these countries' economies, their experience in financial services as well as their pool of savings accumulated over the years.
""The observed continuing increase in the share of investment fund assets in the total assets managed in Europe confirms the success of UCITS as a global brand and the quality of the regulatory framework for the management of alternative investment funds (AIFs)" - Tanguy van de Werve, director general of EFAMA
Elsewhere, total assets under management (AuM) in Europe is estimated at EUR23.1trn, a more than double increase of 113% since end-2008.
Investment funds assets represented €12.5trn (%) - 54% of total AuM - with discretionary mandates accounting for the remaining €10.6trn. Although down from 2017 due to the sharp decline in global stock markets towards the end of 2018, total assets have more than doubled from the lows they reached during the global financial crisis of 2008.
Since 2011, the share of investment funds in total AuM has risen every year, EFAMA said. This has occurred largely as a result of the much higher proportion of equities in the portfolio allocation of investment funds (42% of total investment funds AuM) than in mandates (22% of discretionary mandates AuM) - coupled with the strong rise of stock markets over the 2012-2017 period. The increase in the share of investment funds in the portfolio allocation of pension funds and insurance companies has also played a role in this evolution.
Tanguy van de Werve, director general of EFAMA, said: "This latest edition of EFAMA's Asset Management Report highlights the important role played by the European asset management industry in managing investments on behalf of European citizens and institutional investors. "The observed continuing increase in the share of investment fund assets in the total assets managed in Europe confirms the success of UCITS as a global brand and the quality of the regulatory framework for the management of alternative investment funds (AIFs).
"The overall ecosystem created to support the operations of UCITS and AIFs on a cross-border basis, including the well-functioning model of delegation and the flexibility offered to outsource back-office functions, has allowed to benefit from the best expertise available and played an essential part in the global acceptance of UCITS and AIFs. Ensuring the continued success of these investment vehicles should be a strategic goal for the new European Commission, and an integral part of the plan to create a well-functioning Capital Markets Union."
The report provides detailed data on the assets under management in Europe, the location of the asset management activity, the clients of the industry, the evolution of the asset allocation, and the contribution of the industry in terms of employment.