EFAMA writes that the 2022 Fact Book provides an in-depth analysis of trends in the European fund industry, with an emphasis on what happened in 2021. It also includes an extensive overview of the regulatory developments across 28 European countries and a wealth of data.
In terms of ETFs, EFAMA reports that the share of passive funds is on the rise – Net assets of UCITS ETFs rose from 7.2 per cent of long-term UCITS net assets in 2017 to 10.7 per cent at the end of 2021. The share of index funds also grew over the same period, from 6 per cent to 8 per cent.
Key highlights for 2021 reveal that there were record net sales of long-term UCITS in 2022. More than EUR40 billion of long-term UCITS were purchased each month in 2021. This led net sales of UCITS to an all-time record of EUR812 billion.
There were also record net sales of equity UCITS – Equity funds attracted more than half of total UCITS net inflows in 2021, as investor confidence was boosted by positive growth prospects and buoyant stock markets.
Low net sales of AIFs – AIFs net sales dropped to EUR75 billion, compared to EUR187 billion in 2020, mainly because of the decision taken by several large Dutch pension funds to stop managing their assets within AIF wrapper structures and instead make use of segregated mandates.
Growth in sustainable UCITS – Net assets of sustainable UCITS funds reached EUR3.1 trillion at the end of 2021, which increased the share of sustainable funds in the total net assets of UCITS to 24 per cent. Net assets of SFDR Article 8 funds totalled EUR2.6 trillion, while SFDR Article 9 funds reported EUR491 billion of net assets at the end of 2021.
EFAMA’s Director General, Tanguy van de Werve says: “Beyond providing in-depth analysis of recent trends in the European investment fund industry, this year’s edition of the Fact Book analyses several issues highly relevant for our industry, including the current limitations of the Sustainable Financial Disclosure Regulation (SFDR), the review of the ELTIF regulation, the opportunity cost of saving excessively in bank deposits, as well as some proposals to amend the money market funds regulation. We hope that these analyses will contribute to a better understanding of the structural and regulatory environment that affects the outlook for the industry.”
Additional key findings on the demand for investment funds and longer-term trends in the industry include:
Sustained demand for funds by European investors – Net assets of UCITS and AIFs owned by European investors amounted to EUR16 trillion at the end of 2021, compared to EUR 6.1 trillion in 2011, an increase of 150 per cent over 10 years.
Investors outside Europe are major clients of the European fund industry – The net assets of European funds owned by non-European investors rose from EUR1.6 trillion in 2011 to EUR4.7 trillion in 2021, confirming the popularity of UCITS in Asia and South America. Over the last 10 years, the net sales of funds sold outside Europe averaged 34 per cent of total fund net sales, compared to 33 per cent for cross-border funds sold in Europe as well as for domestic funds.
Institutional investors dominate, EFAMA says. Insurers and pension funds are by far the largest investors in Europe. At the end of 2021, they held approximately EUR6.5 trillion of UCITS and AIF net assets. Other Financial institutions, which are in large part long-term investment funds, increased their fund holdings to EUR4 trillion at the end of 2021, whereas fund holdings by European households increased to EUR3.9 trillion in 2021.
The cost of UCITS continued to fall in 2021 – During the period 2017-2021, the average cost of actively managed equity and bond funds decreased by 9 per cent and 11 per cent, respectively. This trend is expected to continue in the future, as increased transparency on fees and pressure from passive funds will remain in force.