Fitch highlights need for ‘strategic rethinking’ by European asset managers

A report by Fitch Ratings has highlighted the for European asset managers to strategically review products and strengthen key areas of expertise.

According to the report, asset managers also need to scale down or outsource other areas, expand in ‘neighbouring activities’ and invest in new areas.

Fitch fund and asset manager rating group managing director Aymeric Poizot says: “European asset managers will have to focus on the areas where they are credible, demand is sustained and performance expectations are high.

“In the next couple of years, investor demand will focus on income generation with credit or real assets, global products and moderate volatility products such as flexible multi-asset, fixed income multi-strategy or low volatility equity.”

The ratings agency says the industry faces a “difficult environment” with a number of issues affecting the industry.

The Fitch report also anticipates limited growth in core assets of domestic equities and government bonds as investors opt for passive strategies or managerswith strong track records.

It warns key investment strategies “will need critical mass and resources” and expects “significant rationalisation” to establish flagship products.

The agency also believes investment strategies with weak demand or where a manager lacks credibility will be closed or outsourced.

Fitch claims there has been no growth in European assets under management in the past five years, with assets unchanged at $18trn.