Investment funds sponsored by banks and other distributors but which are ‘sub-advised’ by investment managers account for 11% of the Ucits funds universe and have grown despite market volatility, according to research.
Allfunds Data Analytics showed assets under management (AUM) at the end of June this year in sub-advised Ucits funds were €1.38 trillion.
The data also shows interest in boutique fund managers working in the sub-adviser space going from “strength to strength”, particularly for ESG mandates issued by sponsors.
Allfunds Data Analytics, part of the fund platform group Allfunds, released its findings this week in a report called ‘Bringing boutique talent closer to investors through delegated fund managers’. It showed that ESG-focused mandates in the Emea region, which were sub-advised by boutiques, grew by 45% over the last year.
Allfunds released the data at a Dublin conference hosted by fund manager Mediolanum International Funds Limited (MIFL), which partnered on the research.
By the end of the second quarter this year, data shows over €2.19 trillion in assets delegated to third-party managers across Emea sub-advised funds and “fund-in-funds”. This is an estimated 19% of the addressable Ucits market.
Delegated fund assets grew by 2.1% in the year to Q2 2023, in line with the “moderate growth” recorded by the European Fund and Asset Management Association for the European funds industry.
Activity in the delegated funds market remained positive over the last 12 months, according to the report, despite this being a period of significant market volatility and macroeconomic uncertainty. For example, the number of mandates within sub-advised funds grew by 65 (2%).
Furio Pietribiasi, CEO of MIFL, said the research reflected the continued growth of the funds’ industry despite market volatility and was “a testament to the benefits of sub-advisory and multimanager”.
He said MIFL had seen a 94% increase in sub-advised ESG mandates, which was part of a 12% increase across the broader industry for these mandates. Further, the firm saw 9% growth (to €46 billion in AUM) in the banking distribution channel, making it the leading firm in this sector, according to the CEO.
Sub-advisory typically refers to where a wealth manager or a fund manager outsources investment to another fund manager or even several managers at once in the case of a multi-manager fund.
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