Assets under Management (AuM) in Europe stood at EUR 13.8 trillion at end 2011, marking a slight decline on 2010, when AuM amounted to EUR 14.0 trillion. The reduction in net assets came on the back of a challenging year for the industry, in particular the retail segment of the market, as the crisis in the Eurozone took a turn for the worse during the year. In relation to GDP, total AuM in Europe equated to 99% at end 2011. We estimate that total AuM increased in 2012 to EUR 15.4 trillion, on account of reduced tensions on stock and sovereign debt markets, but also due to the positive effect of the European Central Bank (ECB) policy actions. Europe ranks as the second largest market in the global asset management industry, managing 31% of global assets under management.
Discretionary mandate assets represented EUR 7.3 trillion or 53% of AuM at end 2011, whereas investment funds accounted for the remaining EUR 6.5 trillion. Typically, asset managers receive mandates from institutional investors and high-net-worth individuals, whereas investment funds serve the retail and institutional markets.
More than 3,200 asset management companies are registered in Europe employing about 90,000 people directly and over 500,000 indirectly at end 2011. Taking into account related services along the asset management value chain, the level of direct and indirect employment would increase to a significantly higher figure.
Asset management is highly concentrated in a limited number of countries. The top three countries – the UK, France and Germany -- together accounted for 67% of total AuM in Europe at end 2011. The large pool of savings available in the most populated countries in Europe has facilitated the development of local asset management industries to offer their wholesale services to foreign investors.
Institutional investors, acting on behalf of millions of households, represent the largest client category of the European asset management industry, accounting for 75% of total AuM in Europe. Insurance companies and pension funds accounted for 42% and 33% of total AuM for institutional clients at end 2011, respectively.
Holdings of bond and equity assets remain asset managers preferred asset classes at end 2011, with 46% and 29% of total AuM, respectively. Mandates exposure to bond assets amounted to 58%, compared to 33% for investment funds, whereas investment funds had a greater share of equity (33% compared to 26% for mandates).
Asset managers play a key role in helping their clients to reach their investment objectives, whilst contributing to the financing of the European economy, thereby supporting economic growth. Asset management provides an important link between investors and corporations, banks and government agencies that have funding needs. On the basis of data published by the ECB and EFAMA’s calculations, European asset managers held 21% of the debt securities issued by euro area sectors at end 2011, and 31% of euro area companies’ total equity. As leading buy-side entities, asset managers also provide the liquidity needed for the good functioning of financial markets, thereby contributing to lower cost of capital.