The report finds that while France, Germany, the UK and Italy top the league in terms of size of national markets for investment funds, reflecting the importance of the respective domestic savings markets, Luxembourg leads the way in terms of domiciliation, with 24.4% of the European market share, ahead of France (19.8%), Germany (13.5%), the UK (10%) and Italy (5.1%).
Ireland also confirms its role as a paradise for asset managers, with 9.6% of total European assets domiciled in its territory, while managing a much lower percentage. It is thus not surprising that both Luxembourg and Ireland oppose EU plans for a "European passport for fund managers" aimed at lowering their administrative burdens regardless of the country of domiciliation (EurActiv 15/04/08).
As for the type of investment, 40% of the approximately €13.5 trillion worth of European assets under management at the end of 2006 were in bonds, with even higher percentages for specific countries, such as Portugal (62%), Austria (62%), Italy (59%), Belgium (57%) and Germany (49%).
On average, equities represent another 39% of the large European financial pie, the second biggest in the world after the US, but they are only concentrated in certain countries, notably the UK (52%) and Greece (42%).
"Excluding the UK, the European average share of equity would merely amount to 26%, whereas the share of bonds would rise to 48%," reads the report, which is based on data provided by 24 European countries - the 20 main EU economies plus Switzerland, Liechtenstein, Turkey and Norway.
Hungary and France are notably exposed to money markets, representing 26% and 22% of their total investments respectively. Among European resources under management, other financial assets are also not negligible, such as regulated hedge funds and structured vehicles. The report does not take into account non-regulated hedge funds.
Institutional investors remain the most important clients of the European asset management industry, accounting for 66% of the total in comparison to 34% for retail clients, such as individual savers or investors.
Among the institutional actors, the most relevant in Europe remains insurance, which holds 41% of the total assets under management. Pension funds follow with 30%. Insurance groups are stronger in countries with more prudent investment strategies, like Portugal (67%), Italy (57%) or France (50%).
Pension funds thrive in countries where pension systems rely on funded pensions, notably the UK (44%) and Hungary (57%). Banks' exposure results strong mainly in Germany where banks hold 21% of the assets under management, compared to an European average of 4%.
UCITS funds (Undertaking for a collective investment in trasferable securities), the Europe-based retail financial products regulated by the UCITS directive, are confirmed as a globally recognised brand, increasingly sold outside Europe, and mainly in Asia. According to a recent survey by EFAMA, 90% of the net sales of international UCITS originated in Asia in 2007.
