European investment funds are becoming cheaper, larger and increasingly passive, according to data from the European Fund and Asset Management Association (Efama), the trade body.
Long-term Ucits fund costs continued their downward trend in 2024, while assets flowed into ETFs at record levels and smaller funds lost further ground to billion-euro giants, according to Efama.
Fund costs have been falling steadily, with average equity Ucits charges down 21% since 2020 to 0.75%, and bond Ucits costs declining to 0.56%. Multi-asset Ucits remain the most expensive, but even they saw an 8% reduction to 1.16%, according to Efama.
Ucits funds managing under €100 million represented just 4% of the total net assets in 2024, while large funds—those with over €1 billion—continued to gain ground, driven by investor preference for scalable, lower-cost products like ETFs and money market funds.
Passive Ucits now account for 29% of the total market, up from 11% in 2014, with ETF sales hitting a record €269 billion in 2024. Equity ETFs alone drew in €201 billion, in contrast to active equity Ucits, which suffered €53 billion in outflows for a second straight year.
US equities maintained their dominance in Ucits portfolios, making up 51% of equity fund allocations by the end of 2024, nearly double their 2014 share. However, the report notes a potential reversal in 2025, as European stocks outperformed their US peers in early-year trading.
Global fund flows stay positive amid turbulence: Efama
In the sustainable funds category, Article 9 funds under the EU’s Sustainable Finance Disclosure Regulation saw net outflows for the first time, while Article 6 and 8 funds rebounded, supported by surging ETF and money market fund sales.
Retail investor behaviour also rebounded. Following competition from government bond issues in 2023, household fund acquisitions rose to €258 billion in 2024—the second-highest level in a decade—underscoring the growing role of investment funds in European capital markets participation.
Tanguy van de Werve, director general, Efama, commented: “The 2025 edition of the Efama Fact Book shows an industry at a pivotal moment: fund concentration is increasing, asset allocations are shifting, and fund costs continue to decline. While sustainable finance faces headwinds, retail investors are stepping up their engagement, an encouraging sign of the success of the Savings and Investment Union (SIU). Key to that success will be the preservation of Ucits as a gold standard and the promotion of lifecycle investment strategies for retirement savings.”
Thomas Tilley, senior economist at Efama, commented: “Each year, the Efama research team expands its analysis of the European investment fund industry in the Fact Book. Amid the wealth of data and insights it offers, some emerging trends that might otherwise fly under the radar deserve attention. These include the strong growth of closed-ended AIFs in recent years, the waning popularity of sector-specific equity funds and inflation-linked bond Ucits, and the steady increase in cross-border fund ownership among European households, to name just a few.”
