ReviewEuropean Fund Market

Data Digest 2019

Data Digest 2019 02182019

Page 116

Broadridge a global fintech leader with $4 billionin revenue provides communicationstechnology data and analytics We help drivebusiness transformation for our clients withsolutions for enriching client engagementnavigating risk optimising efficiency andgenerating revenue growth

For more information about Broadridge pleasevisit broadridgecom

Diana Mackay - Editorial dianamackaybroadridgecom

Jeacuterocircme Couteur - Product Manager jeromecouteurbroadridgecom

broadridgecom

About BroadridgeAuthor Informaon

An integrated analytics solution for the assetmanagement market tracking institutional andretail investment products globally GlobalMarket Intelligence delivers an unparalleledview of separate accounts domestic fundscross-border funds and ETFs

To learn more and to schedule a free demo ofGlobal Market Intelligence (GMI) visit

For more information please contactlauracohenbroadridgecom

Database Featured

2019 EDITION

Broadridge Global Market Intelligence

Page 216

Broadridge a global fintech leader with $4 billionin revenue provides communicationstechnology data and analytics We help drivebusiness transformation for our clients withsolutions for enriching client engagementnavigating risk optimising efficiency andgenerating revenue growth

For more information about Broadridge pleasevisit broadridgecom

Diana Mackay - Editorial dianamackaybroadridgecom

Jeacuterocircme Couteur - Product Manager jeromecouteurbroadridgecom

broadridgecom

About BroadridgeAuthor Informaon

An integrated analytics solution for the assetmanagement market tracking institutional andretail investment products globally GlobalMarket Intelligence delivers an unparalleledview of separate accounts domestic fundscross-border funds and ETFs

To learn more and to schedule a free demo ofGlobal Market Intelligence (GMI) visit

For more information please contactlauracohenbroadridgecom

Database Featured

2019 EDITION

Broadridge Global Market Intelligence

Page 216

2019 EDITION

broadridgecom

FIGURE 1 - GLOBAL ASSETS - CORE ASSET CLASSES (euroT)

Asia-Pacific Europe InternationalLatin America MEA North America

77

1414

1515

3311

6060

FIGURE 2 - GLOBAL NET SALES IN 2018 - CORE ASSET CLASSES (euroB)

Asia-Pacific Europe International Latin America MEA North America

Bond Equity Mixed Assets

-68

0

68

136

204

GLOBAL VIEW

25 T

The US may be the largest market but it was the APAC region that delivered thelargest sales flows ETFs were at the root of sales success in this region wherethey contributed around euro80bn of net inflows most in Japan where sales werefuelled by the Bank of Japanrsquos quantitative easing programme With the ETFvolumes in hand Japan was the most successful global market in terms of netsales in long-term funds

The tightening of monetary policy by a number of major central banks ndash mostnotably the US Fed which pressed ahead with several rate rises ndash was at theheart of investor anxiety in 2018 leading to a substantial sell-off in bonds WhileEuropeans also fretted about Brexit the USChina trade war had far-reachingconsequences for global sentiment too providing numerous market shocks overthe course of the year 2018 ended in worryingly bearish form with the MSCIGlobal Index losing 8 in December its worst monthly fall for a decade This latecollapse left most long-term fund investors nursing losses for the year the globalbourses were down by over 9 in 2018 but across all long-term funds market-performance losses were a more palatable 5 Against this background manyinvestors chose to take profits or limit their exposure to risk assets and the resultwas an impoverished net sales total of euro245bn across all long-term asset classes

Japan leads the way

Note Core asset classes = Bonds Equities amp Mixed assets funds

Page 316

2018 exploded into life with a first month of sales that beat all previous monthlyrecords In Europe more often than not January sets the tone for the rest of theyear but this was the Chinese year of the Earth Dog which is said to beexhausting and potentially unpredictable The prediction proved to be true andin hindsight the bumper first month was really the last crow of the 2017 FireRooster After January new money became progressively harder for assetmanagers to find and from May redemptions became the new normal

broadridgecom

1780

Total of Fund Closures

Net Sales

Total of Master Groups

2633Total of Companies

30917Total of Funds

Total of Fund Launches 2292

2284

Total Net Assets

Asset Growth

euro9899B

euro998B

FIGURE 4 - CUMULATIVE NET SALES BY YEAR (euroB)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2014 2015 2016 2017 2018

0

269

538

807

euro774B

KEY DATA

EUROPE IN 2018

_____________________

Central bank activity was at the root of this new phase of uncertainty investorshave become addicted to their quantitative easing fix over the last decade and aperiod of cold turkey was the inevitable outcome As the US Fed edged interestrates up on the back of strengthening global economic growth and the ECBannounced that its bond-buying programme would be halted fixed income fundswere culled This would normally benefit equities but political risks dampened theappeal of all but the most diversified of global stock products Brexit was acritical risk that sent the UK market into a spiral of sales decay and emergingmarkets lost their appeal in the trade war rhetoric coming from the US andChina Buffeted from all sides were the previously stoic mixed asset funds manyof which failed to deliver performance in the market storms

By the end of the year Europersquos long-term funds avoided slipping intoredemption but sales volumes were scythed back to just euro21bn a decline of 97on the previous yearrsquos score Assets meanwhile suffered a decline of 4stepping back from the euro10trn ceiling reached in July In summary 2018 was theindustryrsquos worst year for new business since 2011 but the industry still ended theyear with assets nearly 80 higher than their 2011 position

20182017

2019 EDITION

FIGURE 3 - GROWTH OF EUROPEAN ASSETS (euroT)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

4 T4 T

5 T5 T

6 T6 T5 T5 T

6 T6 T7 T7 T

8 T8 T

8 T8 T9 T9 T

10 T10 T9 T9 T

euro9434B

31110

1763

2591

2167

2182

euro21B

-euro463B

Note Excludes Fund of Funds

The last crow of the Fire Rooster turns into abark from the unpredictable Earth Dog

Page 416

FIGURE 3 - Legend

Active ETF Index Tracking

2019 EDITION

Retail investors responded quickly to the deteriorating climate from a frothy peakof euro97bn of inflows in January long-term funds averaged just euro22bn of net receiptsin the following three months But in May the correction began It was triggered byEurozone concerns Brexit and US trade tariffs were background rumbles feedingmarket malaise but it was Italy ndash the combative stance of its new populistgovernment to the Euro and servicing its debt mountain ndash that persuaded investorsto look for profits from their portfolios There was some recovery from redemptionsin the summer months but sharp market corrections in October and again inDecember left investor confidence ravaged The last four months of the year sawredemptions accelerate wiping out most of the gains made in the first quarter The bout of redemptions that made for a disappointing year end (-euro138bn in thefinal quarter) were painful but a fraction of the euro18trn of new money invested inlong-term funds over the previous five year period But other pressures werebuilding 2018 also marked the implementation of the ground-breaking Mifid 2Directive which added to the concerns of asset managers and distributors alikewith its commission ban and new transparency and target market rules Price andcompetition from low-cost passives became more conspicuous themes as thestruggle to deliver performance intensified

broadridgecom

of funds with negative flows of funds with positive flows

5656

4444

euro21BNet sales 2018

euro308MAverage funds size

euro9434BAssets 2018

FIGURE 6 - MARKET SENTIMENT

of funds with negative flows of funds with positive flows

5252

4848

ASSETS

88

77

8686

NET SALES

-525 B-525 B

336 B336 B 402 B402 B

Passive funds enjoyed another solid year of inflows ndash net sales of euro74bn wereregistered with traditional index trackers taking a bare majority of 54 Theirsuccess was relative though the sales pace running at no more than a third of thevolumes recorded in 2017 However passive fund inflows threw the difficultiesendured by active funds into sharper relief With passives excluded active fundswere in sales deficit for the year by over euro50bn

A year of peaks and troughs

Passive resilience

2017 2018

FIGURE 5 - ACTIVE VS PASSIVE OVERVIEW IN 2018

-468Asset growth

FIGURE 7 - EUROPEAN NET SALES BY INVESTMENT TYPE (euroB)

Year (Record Date)Year (Record Date) 2015 2016 2017 2018

BondBond

EquityEquity

MixedMixed

Money MarketMoney Market

RestRest

TotalTotal

40

89

204

89

-5

417 B

103

-50

79

103

17

252 B

330

171

166

69

38

774 B

-64

32

43

15

-5

21 B

Passives remain a long way from dislodging the historical legacy of active fundsTheir market share stands at just 16 in Europe but Mifid 2 will undoubtedlytrigger their enhanced growth and a share of 30 is likely in the next decade Thelikely trajectory of passive funds can already be seen in certain equity sectorswhere the switch from active to passive has been profound In the highly liquidNorth American stock sector passive funds now hold a market share of 53 Theaverage across all equity funds is 27

In the highly liquid North American stock sectorpassive funds now hold a market share of 53

EUROPE IN 2018

Page 516

2019 EDITION

broadridgecom

Excludes money market funds amp ETFs

Cross-border activity is actual sales as measured by the Broadridge SalesWatchConfidential Service The 72 members are estimated to account for 75-80 of the totalcross-border sales activity

FIGURE 9 - DOMESTIC VS CROSS-BORDER SALES IN 2018 (euroB)

Cross Border Domestic Round Trip

Italy

Sweden

Netherlands

Germany

Belgium

Switzerland

Spain

Austria

France

United Kingdom

125 B125 B-59 B-59 B

66 B66 B-22 B-22 B

62 B62 B-34 B-34 B

74 B74 B-51 B-51 B

25 B25 B-28 B-28 B

107 B107 B-144 B-144 B

-48 B-48 B

-49 B-49 B

150 M150 M-55 B-55 B

11 B11 B-21 B-21 B

MARKET STRENGH

FIGURE 8 - CROSS-BORDER ASSETS IN DEC 2018 (euroB)

Common CountryCommon Country Combined AssetsCombined Assets Cross-Border AssetsCross-Border Assets Market share of Cross-Border AssetsMarket share of Cross-Border Assets Cross-Border AssetsCross-Border Assets

Italy

Spain

Netherlands

Belgium

Switzerland

Austria

France

Germany

United Kingdom

Sweden

775 B

305 B

159 B

182 B

535 B

82 B

473 B

744 B

1246 B

320 B

355 B

136 B

67 B

74 B

204 B

24 B

125 B

182 B

210 B

25 B

46

44

42

40

38

29

26

25

17

8

Italy has stood tall for many years as Europersquos most successful market notonly for the large domestic players but also for foreign groups building across-border footprint The country had its fair share of upheavals in 2018but with appetite loss spreading across Europe Italy continued to deliver thelargest inflows This year though it was the local captive players that werethe beneficiaries And this was a theme across the whole of Europe wheremarket challenges afflicted cross-border groups to a greater extent than localcompetitors which were able to defend their territory with the help of theircaptive clients Those reliant on third party distribution particularly those inthe cross-border cohort paid the penalty of their recent successes asinvestors took profits from funds that were now seen to be risky

Germany comes close to Italy in terms of overall market size although themarket opportunity for cross-border groups has slowed since its heyday inthe late 1990s It now lags behind Switzerland in terms of the volume ofassets invested in cross-border funds To be fair though a number ofimportant cross-border players targeting the Swiss market are Swiss in originand therefore have some cultural advantage

A closer look at the UKWhilst the UK maintained its position as Europersquos largest market with euro13trnof fund assets it was also the market that suffered the largest redemptionsthanks to a complex interplay of features many of which are unique to themarket Most important of these was ongoing uncertainty caused by thecountryrsquos imminent exit from the European Union which remains a subject ofbitter debate UK fund groups have had to take urgent action to future-proofthe assets they manage so non-UK residents with holdings in UK-basedfunds have been switched into equivalent offshore portfolios For somegroups this has entailed the launch of new products in either Luxembourg orDublin Most of this activity creates nil value in the charts here but at adomicile level it has involved a noticeable shift of assets Meanwhile a moresecular shift of assets was evident with long-held UK equity income fundsbeing sold off in favour of more diversified global products The net effect hasbeen steep redemptions because many of the new products favoured areETFs which are not included in this analysis because their source of salescannot be identified

Page 616

2019 EDITION

broadridgecom

FIGURE 11 - CUMULATIVE NET SALES BY INVESTMENT TYPE IN 2018 - CORE ASSET CLASSES (euroB)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Bond Equity Mixed Assets

-50

0

50

FIGURE 10 - EUROPEAN ASSETS (euroT)

Bond Equity Mixed Assets

3535

4747 1818

Bonds were in the firing line in 2018 suffering redemptions in eight months out of12 and posting a cumulative outflow of euro64bn by the end of the year Withpassives excluded the withdrawals mounted to euro92bn the worst year for activebond managers since the financial crisis a decade earlier However this needs tobe viewed in the context of inflows of over euro1trn in the post-crisis years of loosemonetary policy The sectors that suffered the most acute pain were the coreglobal sectors along with the risky high yield options most of which had a strongrun in 2017 and were vulnerable to allocation shifts when the mood musicchanged Nonetheless bonds remain a much-loved option in Europe andalthough there was little on offer to mop up the hemorrhage fund selectors foundspace in their client portfolios for alternative bond products which posted euro14bnof inflows

Mixed asset funds were Europersquos success story of the year despite ending with asomewhat tarnished reputation This is a category that has been a consistentcontributor of new money since 2012 Investors maintained their faith in thesector for most of 2018 but they began to falter in the summer and bySeptember they were taking their money and heading for the hills Despite thismixed asset funds ended the year with cumulative net sales of euro43bn beatingequity funds by a margin of euro11bn Key to their success though was the incomesector and Allianzrsquos Income amp Growth fund which was responsible for euro11bn ofthe euro15bn generated by the sector

INVESTMENT STRENGTH

8 T

Global equies soarTotal net equity flows were lacklustre at euro32bn but Europes top-sellingsector by a noticeable margin was nevertheless global equity (see Fig 12overleaf) This was the sweet spot for investors nervous of making anygeographical bets It was dominated by the Swedish AP7 pension fund anda number of funds offering a refuge to UK investors looking to diversify out oftheir traditional UK stock portfolios

With passives excluded bond withdrawalsamounted to euro92bn

Page 716

FIGURE 13 - BOTTOM SECTORS BY SALES IN 2018 (euroM)

YearYear

Fund SectorFund Sector

2017 2018

Net SalesNet Sales Net Sales RankNet Sales Rank Net SalesNet Sales Net Sales RankNet Sales Rank

Bonds EUR Corp Inv Grade

Bonds USD Corp High Yield

Bonds Global High Yield

Equities UK Income

Bonds Flexible

Equities Global Income

Money Market GBP

Asset Allocation Alternative

Equities Europe

Bonds EUR Corp High Yield

Derivatives

Equities Europe Ex UK

Bonds Global Corporates

Short Term Dynamic

Bonds Global Currencies

4254

-2104

4403

-9019

26195

2994

34052

30931

6065

-3542

-2211

9272

17447

21655

85169

45

227

43

233

11

51

5

8

37

232

228

26

20

13

1

-20061

-15575

-14385

-10464

-9252

-8324

-7230

-6869

-6843

-6564

-6161

-6137

-5409

-5377

-5086

237

236

235

234

233

232

231

230

229

228

227

226

225

224

223

2019 EDITION

FIGURE 12 - TOP SECTORS BY SALES IN 2018 (euroM)

YearYear

Fund SectorFund Sector

2017 2018

Net SalesNet Sales Net Sales RankNet Sales Rank Net SalesNet Sales Net Sales RankNet Sales Rank

Equities Global

Equities North America

Fund of Funds Balanced

Mixed Assets Income

Bonds Alternative

Mixed Assets Conservative

Asset Allocation

Real Estate

Money Market USD

Fund of Funds Asset Allocation

Asset-backed Securities

Fund of Funds Dynamic

Equities China

Money Market EUR

Equities Emerging Markets

60264

-128

25549

34530

19128

30791

33821

10149

28727

19998

14502

6448

-728

5439

19437

2

186

12

4

17

9

6

24

10

15

22

35

218

40

16

41951

18972

15595

14921

14436

10561

10235

9897

9173

8766

8153

7443

6926

6185

6034

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

broadridgecom

ALL SECTOR RANKING

Page 816

ValuesValues

TOP 10TOP 10

RESTREST

TOTALTOTAL

84825

-78717

6107

2019 EDITION

broadridgecom

Note Excludes money market funds

FIGURE 15 - TOP MASTER GROUPS BY SALES IN 2018 (euroM)

Master GroupsMaster Groups NATNAT Funds Funds AssetsAssets Net SalesNet Sales

Natixis FR

BlackRock US

UBS CH

MMCMercer US

Vanguard US

Baillie Gifford GB

Allianz GI DE

State Street US

Legal amp General GB

Royal London GB

295

599

595

59

75

52

359

163

85

50

90662

608678

257047

45553

134144

39298

128750

69358

57319

49561

12460

11442

11342

10515

8313

7468

6577

6040

5687

4827

FIGURE 14 - TOP MASTER GROUPS BY ASSETS IN 2018 (euroM)

Master GroupsMaster Groups Assets Dec 2017Assets Dec 2017 Assets Dec 2018Assets Dec 2018 Assets Growth YoYAssets Growth YoY

BlackRock

Amundi

UBS

DWS

Intesa SP

VRUnion

JP Morgan AM

Credit Suisse

Schroders

Vanguard

634718

276090

255862

250352

186085

156934

159632

142848

155628

130381

608678

257541

257047

227749

178519

151908

147008

143608

140122

134144

-41

-67

05

-90

-41

-32

-79

05

-100

29

COMPETITOR STRENGH

FIGURE 16 - TOP MASTER GROUPS BY ASSETS GROWTH IN 2018 (euroM)

Master GroupsMaster Groups Assets Dec 2018Assets Dec 2018 Assets Growth YoYAssets Growth YoY Net Sales 2018Net Sales 2018

MMCMercer

Natixis

Baillie Gifford

Unicredit

Vanguard

Fundsmith

Ashmore

Vontobel

Royal London

Legal amp General

State Street

45553

90662

39298

13292

134144

19811

15611

37281

49561

57319

69358

8507

7231

5145

3996

3763

3071

2669

2661

2547

2520

2482

10515

12460

7468

4358

8313

2915

2526

4521

4827

5687

6040

BlackRock remains the giant of the European industry able to generate newmoney regardless of the market environment Europersquos best-known cross-border brand is many lengths ahead of its closest rival Amundi and in 2018it was the grouprsquos passive business that underpinned its sales fortunes Inthe passive world it is a winner-takes-all game when it comes to net inflowsand in 2018 BlackRock was the winner by a large margin

More generally though the market environment was far from favourable tothe bulge bracket brands most of which disappeared from the leaderboardIn the asset management world groups with extensive product ranges anddistribution arrangements benefit from the bull years but suffer from profit-taking in the bad

Redemptions are a unique feature of the industry and are generally thepenalty of past success This left the leaderboard for all long-term fundsdominated by institutional players groups with access to captive clientspassive houses and specialists Natixis although ranked 21st in size andtherefore amongst the market leaders thrived last year from demand for theliquid alternative funds offered by its specialist boutique affiliates

Page 916

FIGURE 16 (REST) TO

ValuesValues

Top 10Top 10

RESTREST

TOTALTOTAL

47059

-77871

6107

2019 EDITION

broadridgecom

Note Excludes money market funds

FIGURE 18 - TOP 15 FUNDS BY NET SALES IN 2018 (euroM)

Master GroupsMaster Groups Fund NameFund Name DomicileDomicile StrategyStrategy TypeType Launch DateLaunch Date Net SalesNet Sales

Allianz GI Allianz Global Investors Fund - Allianz Income and Growth LU Active Mix 2011-06

UBS Focused Sicav - High Grade Bond USD LU Active Bnd 2005-08

Natixis H2O Adagio FR Active Bnd 2010-08

BlackRock iShares Core SampP 500 UCITS ETF (USD) IE Passive Eq 2010-05

Sjunde AP-fondens AP7 Aktiefond SE Active Eq 2010-05

Baillie Gifford Baillie Gifford Global Alpha Growth GB Active Eq 2010-03

MMCMercer Mercer Global Investments - Mercer Investment Fund 10 IE Active Mix 2018-01

BlackRock iShares Core MSCI EM IMI UCITS ETF IE Passive Eq 2014-05

VRUnion PrivatFonds Kontrolliert DE Active Mix 2010-07

Morgan Stanley Morgan Stanley-Global Opportunity Fund LU Active Eq 2010-11

BAML Merrill Lynch Investment Solutions - Global Debt-Government UCITS Fund LU Active Bnd 2017-11

Soc GenLyxor Multi Units Luxembourg - Lyxor SampP 500 UCITS ETF LU Passive Eq 2010-03

UBS UBS (Lux) Equity Fund - China Opportunity (USD) LU Active Eq 1996-11

BlackRock BlackRock ACS US Equity Tracker GB Passive Eq 2014-06

iShares Core MSCI World UCITS ETF IE Passive Eq 2009-09

11385

6779

4740

4483

3624

3353

3261

3111

3058

2955

2855

2846

2708

2576

2536

FIGURE 17 - TOP 15 FUNDS BY ASSETS IN DEC 2018 (euroM)

Master GroupsMaster Groups Fund NameFund Name DomicileDomicile StrategyStrategy TypeType Launch DateLaunch Date AssetsAssets

PIMCO PIMCO GIS Income Fund IE Active Bnd 2012-11

Sjunde AP-fondens AP7 Aktiefond SE Active Eq 2010-05

Bridgewater Bridgewater Pure Alpha Strategy 18 Volatility VG Active Hdge 1991-12

Allianz GI Allianz Global Investors Fund - Allianz Income and Growth LU Active Mix 2011-06

BlackRock iShares Core SampP 500 UCITS ETF (USD) IE Passive Eq 2010-05

JP Morgan AM JPMorgan Investment Funds - Global Income Fund LU Active Mix 2008-12

MampGEastspring MampG Optimal Income Fund GB Active Bnd 2006-11

Vanguard Vanguard Funds Plc - Vanguard SampP 500 UCITS ETF IE Passive Eq 2012-05

VRUnion PrivatFonds Kontrolliert DE Active Mix 2010-07

Fundsmith Fundsmith Equity GB Active Eq 2010-11

DWS DWS Top Dividende DE Active Eq 2003-04

AB AB FCP I Global High Yield Portfolio LU Active Bnd 1997-09

Deka Deka ImmobilienEuropa DE Active Prop 1997-01

PIMCO PIMCO GIS Global Investment Grade Credit IE Active Bnd 2003-07

Carmignac Carmignac Patrimoine FR Active Mix 1992-01

48140

41322

35403

25995

25658

24137

22468

18234

17690

17572

16760

16079

15720

15087

14265

FUND LEADERS

Page 1016

2019 EDITION

broadridgecom

FIGURE 21 - HISTORICAL NET SALES (euroB)

2014 2015 2016 2017 2018

Active ETF Index Tracking

42423939

326326

37376464

225225 343438386969

7878

8585

521521

40403232

-609-609

PRODUCT THEMEAcve vs Passive

FIGURE 19 - ETF TOP GROUPS BY SALES IN 2018 (euroM)

Master GroupsMaster Groups NATNAT Funds Funds AssetsAssets Net SalesNet Sales

BlackRock US

DWS DE

State Street US

Vanguard US

Amundi FR

BNP Paribas FR

Invesco US

Fidelity US

Deka DE

Morgan Stanley US

315

176

97

21

146

30

97

4

43

7

296242

67544

26136

31014

33803

6875

15470

640

8540

818

14985

5890

4678

2155

1409

980

518

514

486

409

FIGURE 20 - INDEX TRACKING TOP GROUPS BY SALES IN 2018 (euroM)

Master GroupsMaster Groups NATNAT Funds Funds AssetsAssets Net SalesNet Sales

Vanguard US

Legal amp General GB

Northern Trust US

Swisscanto CH

Amundi FR

Soc GenLyxor FR

BlackRock US

HSBC GB

UBS CH

Danske Bank DK

42

40

36

65

35

11

75

22

65

14

100288

36027

23034

33217

14536

5806

129722

14765

70196

5027

5916

5305

3781

3606

3463

2791

2788

2041

2004

1503

2017 proved that active funds were not dead but they still hold theoverwhelming weight of assets so they fared less well when markets becamevolatile in 2018 Trackers and ETFs were also penalised but had less to loseand therefore ended the year with sales volumes that closely mirrored 2016There are now 2655 passive funds in Europe of which 59 are ETFs Unlikein the US ETFs have traditionally been vehicles favoured by institutionalinvestors looking for the liquidity and regulatory protection they offer With mostdistribution incentivised by commissions retail investors tended to opt foractively managed funds or index trackers for beta exposure Regulatorypressure to remove commissions from the industry will encourage greater retailuse of ETFs in the future but index trackers are competing keenly on price andas long as they can compete they are unlikely to be displaced by ETFs

Winner takes allThe frequently heard mantra of winner takes all has come from the world ofETFs but infected perception of the entire industry Concentration of assetsand net sales is clearly evident from Fig 16 BlackRock is the undisputed kingcontrolling nearly half of the euro624bn of assets invested in ETFs (47) andresponsible for 46 of net sales in 2018 There are 60 groups offering ETFsbut the top five groups account for 79 of assets leaving very little for themajority of groups that have stepped into the field Concentration is much lessof an issue for those offering index trackers In this more populous campBlackRock still reigns supreme but with a market share of just 18 whilst thetop five groups account for just 56 of assets Net sales are also more evenlyspread amongst index tracker rivals Vanguard secured the largest volumes in2018 but was only marginally ahead of UK rival Legal amp General

Page 1116

2019 EDITION

Note Excludes money market funds

FIGURE 22 - FUND LAUNCHES amp CLOSURES

2014 2015 2016 2017 2018

Fund Launches Fund Closures Fund Mergers

912912

16881688

25302530

942942

16181618

25222522

835835

17111711

22352235

726726

15581558

22922292

832832

13501350

21672167

broadridgecom

PRODUCT DEVELOPMENT

FIGURE 23 - TOP SELLING FUND LAUNCHES IN 2018 (euroM)

Fund NameFund Name Fund DomicileFund Domicile Launch DateLaunch Date TypeType Net SalesNet Sales

Mercer Global Investments - Mercer Investment Fund 10 Ireland 2018-01 Mix

BlackRock Global Funds - Dynamic High Income Fund Luxembourg 2018-02 Mix

Mercer Global Investments - Mercer Investment Fund 11 Ireland 2018-01 Mix

FP Brunel UK Equity United Kingdom 2018-11 Eq

Threadneedle (Lux) - European Smaller Companies Luxembourg 2018-10 Eq

LampG Global Developed Four Factor Scientific Beta Index United Kingdom 2018-08 Eq

AEAM Dutch Mortgage Fund 2 Netherlands 2018-05 Bnd

Gestielle Cedola Multi Target V Italy 2018-03 Mix

Access Long Term Global Growth Investment United Kingdom 2018-11 Eq

KBC Bonds SRI Strategic EMU Short Medium Luxembourg 2018-11 Bnd

3261

2320

1913

1868

1812

1731

1672

1582

1403

1369

1616 4141-255-255

6262 6060

Fund Launches

Page 1216

2019 EDITION

broadridgecom

FIGURE 24 - FUND LAUNCHES BY GROUP IN 2018 (euroM)

Master GroupMaster Group Funds Funds Net SalesNet Sales

Intesa SP

BlackRock

MampGEastspring

JP Morgan AM

Amundi

ANIMA

MMCMercer

Standard Aberdeen

KBC

Unicredit

95

62

31

23

144

30

9

14

63

34

18180

17296

12974

12311

8847

7504

7173

4852

4717

4145

Sum 505 97997

FIGURE 25 - NUMBER OF FUND LAUNCHES BY CORE ASSET CLASS

2015 2016 2017 2018

Bond Equity Mixed Assets

612612

968968

684684

558558

763763

605605 571571

809809

680680

524524

891891

535535

FIGURE 27 - FUND LAUNCHES BY REGION IN 2018 (euroM)

Fund RegionFund Region Funds Funds Net SalesNet Sales

Europe

International

1064

1103

90176

94341

Sum 2167 184516

FIGURE 26 - NUMBER OF FUND LAUNCHES BY STRATEGY in 2018

Active ETF Index Tracking

22452245

188188

7272

PRODUCT DEVELOPMENT

2018 marked a new low for product development initiatives and furtherreinforced the sluggish contraction trend that has been evident since 2007 whenover 5000 new funds were launched Recent regulations have addedconsiderably to the cost of developing new products which must increasinglygenerate well over euro100m to prove their worth Rationalisation and the culling offunds that are no longer productive continues but in 2018 the numbers ofclosures also declined ndash in line with the number of funds launched Closing fundsis a relatively expensive option for fund groups whilst fund launches offermarketing opportunities new stories for sales people and the chance to refreshthe product line Ironically new funds with no track record still account forconsiderable volumes of new business Funds making their debut in 2018gathered euro211bn of net inflows whereas the industry as a whole accounted fornet sales of just euro21bn

Italian banking giant Intesa SP was one of the most prolific developers of newfunds and certainly the most successful in terms of assets gathered In Italy newfunds ndash particularly those with fixed maturity dates ndash are popular and most localasset managers thrive on a diet of launches that suck client money in from fundsthat have expired or are no longer fashionable MampG also features high in theproduct development rankings but its position is linked to launches inLuxembourg to Brexit-proof its business which was previously built on UK-domiciled funds The net sales posted by these funds are transfers from UKequivalent products MampG is just one of a number of groups forced to take suchaction and this had the effect of artificially boosting the sales volumes attributedto the 2018 launches

Fund Launches

Funds making their debut in 2018 gatheredeuro211bn of net inflows

Page 1316

2019 EDITION

The following report is based on the unique fund analytics delivered throughBroadridge Global Market Intelligence (GMI) our leading global fundanalytics database The charts and tables in this report reflect only the tip ofthe iceberg in terms of the depth and breadth available from Broadridge GMIThe report offers a high-level overview of European fund flow activity in 2018

Global Market Intelligence (GMI) helps you make more strategic decisionsmore effectively allocate your companyrsquos resources and most importantly bemore responsive to your customersrsquo needs all through combining the powerof the FundFile and SalesWatch datasets

Broadridge FundFile enables deep fund flows analysis of all keygeographical markets covering Asia Pacific Latin America the Middle Eastand Africa and North America and delivers a truly global fund flows solutionBy gradually building the international reach of its global sales data andmaintaining its high quality and ease of use over the past ten years FundFilehas become the unparalleled source of data and analysis with informationon more than 80000 funds

The cross-border dimension of the European funds industryndashtheldquointernationalrdquo fund marketndashcan truly be assessed only with BroadridgeSalesWatch a unique cooperative and confidential benchmarking servicethat allows leading fund groups to track their cross-border sales and assetsagainst their competitorsrsquo by country distribution channel institutional versusretail activity and both gross and net sales This service now counts 72 ofthe leading asset managers among its members (Some sample data takenfrom the tool can be seen on page 6 of the current report)

1 All data is at December 2018 unless otherwise stated

2 lsquoInternationalrsquo fund market Broadridge defines an International fund as afund that sources less than 80 of its assets from any single country Somefund groups have domestic and international funds

3 lsquoDomesticrsquo fund market If a fund sources more than 80 of its assets from asingle country then the fund is allocated to that market regardless of itsdomicile

4 Funds of funds have been excluded from all charts and tables (to avoiddouble counting) unless otherwise stated Therefore a market total is the sumof all the investment categories excluding the three funds of funds categories(in-house ex-house and hedge)

5 The investment category lsquootherrsquo includes a variety of different productcategories For most markets especially Belgium Spain and France the figurecomprises guaranteed funds but there are also derivatives and other specialityfunds in the lsquootherrsquo category

6 Property funds are open-ended property funds only

7 Master group Analysis that aggregates the European mutual fund assetsunder the umbrella of their parent company name

8 ETFs are included in Broadridgersquos database on mutual funds but thisexcludes exchange-traded commodity products that are not mutual funds

9 References to foreign activity relate to actual sales as measured byBroadridgersquos SalesWatch confidential service The 72 SalesWatch membersare estimated to account for 75-80 of total cross-border sales activity

No part of this document may be distributed reproduced or posted without the express written permission of Broadridge Financial Solutions Inc copy2019 Broadridge FinancialSolutions Inc Broadridge and the Broadridge logo are registered trademarks of Broadridge Financial Solutions Inc

Footnotes About the report

Page 1416

broadridgecom

copy Copyright 2019 Broadridge Financial Solutions Inc

Page 1516

broadridgecom

copy Copyright 2019 Broadridge Financial Solutions Inc

Page 1516

copy Copyright 2019 Broadridge Financial Solutions Inc

broadridgecom

Page 1616