EFAMA
Quarterly Release
(click on icon at bottom of page for full report)
Trends in
the European investment fund industry for Q4 2007 and results for 2007
MAIN HIGHLIGHTS CONCERNING 2007
European investment fund assets
grew by almost EUR 400 billion in 2007 to reach EUR 7,925 billion at end
2007. Total net assets of UCITS grew by
4.2% to reach EUR 6,203 billion at year-end 2007, whereas non-UCITS assets grew
by 5.3% to EUR 1,723 billion.
This positive development could be achieved
despite net outflows from UCITS in the third and fourth quarters of 2007, which
reflected heightened risk aversion among European investors.
The high concentration of net
inflows in funds domiciled in Luxembourg
(EUR 188 billion) and Ireland
(EUR 80 billion) highlights the success of UCITS as a global brand and the
growth of the fund business in Asia.
Money market “enhanced” and
“dynamic” funds suffered from concerns about the risk exposure of these funds
to asset backed securities, as investors reassessed their portfolio composition
in light of the credit crisis in the second half of 2007.
Enhanced competition from banking
deposits and structured products against the background of rising interest
rates continued to be felt strongly throughout Europe, with Italy being the
most severely hit.
The demand for balanced funds
remained strong throughout Europe. Funds
of hedge funds, especially in France,
Italy and Switzerland, and special funds reserved for
institutional investors, especially in Luxembourg,
Germany, Denmark and the United Kingdom, recorded
substantial inflows.
OUTLOOK FOR 2008 AND THE MEDIUM TERM
The prospect for 2008 is
uncertain, as the risks surrounding financial markets and global economic
growth remain on the downside. Hence, investors’ appetite for equity
exposure and interest rate risk is likely to remain subdued. In parallel,
money market funds should benefit from flight-to-safety effects in the first
quarter of 2008.
As regards the medium-term,
unwinding of flight-to-safety portfolio shifts in response to greater investor
confidence should trigger renewed demand for equity and bond funds.
Assuming Asian economies continue
to expand at a steady rate, UCITS should continue to attract strong net inflows
from Asia, as investors there are still in the
early phases of diversifying their savings into investment funds.
In terms of regulation, closing
the gap between UCITS and other less regulated savings products both at the
point of sale and at production level, and removing the sources of
inefficiencies in the UCITS Directive, would strengthen the foundations for the
continued success of UCITS in the future.
Equally important is the need to
further highlight in Europe the benefits of
maintaining a proportion of long-term savings in equity to optimize the return
of pension savings.
Contact
Bernard Delbecque
Director of Economics and Research
EFAMA – European Fund and Asset Management Association
Tel. +32 (0) 2 513 39 69
info@efama.org
