The European Fund and Asset Management Association (EFAMA) has published the latest edition of its Market Insights series, entitled “Investment fund distribution channels in Europe”.
This report provides an analysis of how investment funds are distributed to retail investors across 19 European countries, covering assets totalling EUR4.4 trillion. Fund managers who participated in the survey also shared their perspectives on the expected changes in the fund distribution landscape over the next five years.
Key findings:
o Fund distribution by financial intermediaries providing advice to clients – encompassing banks, financial advisers, insurers, portfolio managers, and full-service brokers – stands out as the most important distribution channel accounting for 80 per cent of fund assets owned by European retail investors.
o Banks hold a significant position in the distribution system, with a market share of 45 per cent in Europe and 57 per cent in the European Union. This variation is attributed to the higher market share of portfolio managers, full-service brokers, and financial advisers in the UK, which stand at 70 per cent compared to 27 per cent in the EU. Bank market share ranges from 91 per cent in Romania to 9 per cent in the UK.
o Financial advisers rank second in both Europe and the European Union, with a market share of 14 per cent and 18 per cent, respectively. Their presence is particularly strong in Italy and the UK, with market shares of 36 per cent and 33 per cent, respectively.
o Insurers follow suit with a market share of 7 per cent in Europe and 9 per cent in the European Union. In Norway, France and Slovenia, insurers play a more substantial role in fund distribution, with market shares of 19 per cent, 18 per cent and 17 per cent, respectively.
o Open architecture fund platforms, offering access to a diverse array of funds from various fund managers, have a modest market share in Europe and the European Union (10 per cent and 8 per cent, respectively), but they exhibit greater presence in Norway and Sweden, with market shares of 24 per cent and 19 per cent.
o Investment funds can be bought by retail investors for retirement savings. Although the pension saving channel represents a modest 7 per cent market share in Europe, its prominence is notable in Denmark (46 per cent), Sweden (43 per cent) and France (22 per cent).
o Looking ahead, survey participants anticipate an increase in the market share of open architecture fund platforms and financial advisers over the next five years. Financial technology is expected to be the primary driver of the evolution of the fund distribution landscape.
Bernard Delbecque, Senior Director at EFAMA says: “The report underscores the pivotal role of fund distribution channels capable of offering guidance, support, and advisory services to retail investors. Ensuring accessibility to these channels without imposing upfront fees is crucial for fostering increased household participation in capital markets. Furthermore, the anticipated rise in competition between digital and traditional fund distribution channels is good news, as it will incentivise advice-based distribution channels to evolve, further enhancing user experience and delivering added value.”
