Trends and prospects for the growth of managed assets in Europe
3 FEB, 2025
By Jose Luis Palmer from RankiaPro Europe
By the end of 2023, the total assets managed in Europe reached 30 trillion euros according to data from EFAMA: Asset Management in Europe, an overview of the asset management industry (16th edition), marking an increase of 8.3% compared to 2022. This growth reflects a significant rebound in equity and bond markets, although not enough to fully recover the decline recorded in 2022. In this article, we analyze the evolution of AuM in Europe, the dynamics between investment funds and discretionary mandates, and the market distribution among the main players.
The sector has not yet recovered the losses of 2022
2023 saw a solid performance of the equity markets, with the Euro STOXX index growing by 11.2%. The bond market also showed signs of recovery thanks to the stabilization of interest rates, with the MSCI Eurozone Government Bond index increasing by 7.3%.
Despite the rebound, the sector has not yet recovered the losses of 2022, a year marked by geopolitical instability related to the conflict in Ukraine and the tightening of monetary policies that eroded investor confidence. The energy crisis and high inflation further aggravated the economic situation, leading to greater volatility in financial markets and a reduction in investments in certain sectors.
From 2013 to 2021, AuM recorded steady growth, supported by robust performance of financial markets and consistent inflows of new managed capital. The impact of the COVID-19 pandemic in 2020 caused a temporary market crash, followed by a rapid recovery thanks to expansive fiscal and monetary policies adopted globally. This momentum continued into 2021, culminating in an annual growth of 12.9% and reaching a record of 32.2 trillion euros.
Projections for 2024 indicate continuous growth, with managed assets estimated at 32.7 trillion euros by the third quarter, supported by a further rally in the stock markets (+11.7%) and significant investments in bond funds. This growth is fueled by a combination of favorable macroeconomic factors, including a more accommodating monetary policy and an improvement in global economic prospects.
6 countries that represent about 85% of the total AuM in Europe
Asset management in Europe is highly concentrated in six countries that represent about 85% of the total AuM: United Kingdom, France, Switzerland, Germany, Netherlands, and Italy. The United Kingdom leads the sector thanks to the presence of the City of London, one of the main global financial centers, followed by France and Germany, strong with their domestic markets and the financial centers of Paris and Frankfurt.
The United Kingdom holds a significant market share thanks to the predominant role of pension funds and international asset management companies based in London. France benefits from the strong presence of the insurance sector and the delegation of management by institutional investors, while Germany stands out for the importance of investments in alternative funds by institutional investors.
Outside of these countries, Denmark, Belgium, and Austria manage significant volumes of assets, while in Central and Eastern Europe, Poland, Czech Republic, and Hungary stand out as emerging hubs of asset management. In Southern Europe, after Italy, Spain stands out as a significant hub thanks to the growing importance of investment funds and the presence of large national financial institutions.
The concentration of the sector is influenced by several factors, including the presence of large financial centers, the size of domestic markets, the structure of pension systems, and national regulation. In addition, the increasing integration of European financial markets and the harmonization of regulations are contributing to greater competition and a wider distribution of assets among different countries.
Investment funds vs discretionary mandates
By the end of 2023, investment funds represented 57% of the total assets (17.095 trillion euros), while discretionary mandates constituted the remaining 43% (12.890 trillion euros).
Investment funds have seen steady growth between 2013 and 2023, with a significant peak in 2021, when the share increased by 2.3 percentage points, thanks to the strong performance of the stock markets. This positive trend was supported by the higher allocation in listed shares (about 41%) compared to discretionary mandates (22%), while the latter have a greater exposure towards bonds (45% against 22% of the funds).
The differences in asset allocation strategies reflect the different preferences of institutional and retail investors. Investment funds tend to be more flexible and suitable for a wide range of investors, while discretionary mandates offer customized solutions for institutional clients with specific risk management needs and investment objectives.
Furthermore, the growth of investment funds has been favored by the expansion of passive products, such as ETFs, which have gained popularity thanks to reduced management costs and transparency. On the other hand, discretionary mandates continue to represent a crucial component for wealth management, particularly in markets with a strong presence of institutional investors.
Market share of European asset managers
According to EFAMA data, European asset managers managed about 32% of all European financial assets at the end of 2023, with 21 trillion euros for institutional clients and 9 trillion for retail clients. The share of assets managed externally went from 33% in 2019 to 31% in 2022, then back to 32% in 2023.
The trend towards greater externalization of asset management is driven by factors such as the increase in technological costs, the reduction of management fees and the search for yield in a volatile market. Financial institutions are increasingly seeking to outsource management to benefit from economies of scale, diversification and access to specialist skills.
Another key factor is regulatory evolution, with increasingly stringent requirements in terms of transparency, risk management and sustainability. This has led many institutional investors to collaborate with external asset managers capable of offering integrated solutions and advanced consulting services.
Looking to the future, there is significant potential to increase market share in the retail segment. The European Union, through the Retail Investment Strategy (RIS), aims to mobilize private savings towards capital markets, simplifying access to investments and promoting the participation of retail investors. This goal requires a joint commitment from legislators, regulators and industry operators to create an environment conducive to investment and to strengthen investor confidence.
