European fund sector contracts for second time in decade

The number of funds in the European asset management industry contracted for the second time in the past decade during 2011, according to figures from Lipper.

Ed Moisson
Ed Moisson

The mutual fund information provider’s latest European Fund Market Review says 35,364 products were found in the industry at the end of 2011, which is a decline of 43 from one year earlier.

The report notes that this compares with the larger fall of 801 that was seen in 2009, the last time the industry contracted.

Ed Moisson, head of UK and cross-border research at Lipper, says: “2011 was only the second year in the past decade that the European funds industry suffered net outflows.

“Clearly the pressure is on fund management companies with international ambitions to really understand which products will be well received and in which markets.”

The research also shows there was a “unsurprising tail-off” in new product launches in the second half of 2011. Some 1,687 funds were unveiled over the first half but this dropped to 1,291 in the second.

Close to half of assets run by the European fund management industry are in products launched over the past decade, according to analysis by Lipper.

The mutual fund information provider’s latest European Fund Market Review says 46% of industry assets are managed by portfolios unveiled in the last 10 years – with 22% held in funds launched in the past five years.

However, Moisson adds that this trend is not guaranteed to continue over the course of 2012.

“Just as 2009 did not herald a new dawn of product rationalisation across the industry (there was a net increase of 871 funds in 2010), so it seems very unlikely that 2011 will either,” he says.

“Instead market conditions will largely dictate where product development priorities lie.”