European assets under management reached an estimated €32.7 trillion by the end of September 2024, and the industry will surpass €33 trillion by year-end, according to the European Fund and Asset Management Association (Efama).
This growth was driven by improving stock and bond valuations, highlighted Efama, the voice of the European investment management industry.
Asset management activity was concentrated in six countries, which account for nearly 85% of the market. The UK led the sector, followed by France, Switzerland, Germany, the Netherlands, and Italy.
Asset managers held €6.6 trillion in EU-issued debt securities and €3 trillion in EU-listed shares at the close of 2023, representing approximately 28% of all EU debt securities and 27% of listed shares.
Retail clients’ share of total AuM went up from 26% in 2019 to 30.8% in 2023. According to the data, households increasingly favour ETFs, which offer “cost-effective and diversified” access to markets. This trend is in alignment with the shift toward passive investing, Efama highlighted, with passive strategies’ market share climbing to 17% from 16.1% in 2023. “The persistent cost advantage of passive management over active strategies remains the primary driver behind this shift.”
The market share of bonds grew more rapidly than that of equity, reflecting strong demand for bond funds, which emerged as the top-selling fund category of the year. Asset managers also rebalanced their portfolios towards bonds in anticipation of potential rate cuts in 2024.
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Despite record AuM levels, profit margins fell to 11.1 basis points of average AuM in 2023—the lowest since the 2008 financial crisis. Persistent fee pressure, coupled with rising technology costs, has strained profitability, highlighting the need for cost efficiency in an increasingly competitive environment.
Thomas Tilley, senior economist, Efama, said: “The asset management industry is seeing a lot of change right now, with the further growth of passive investing, increasing interest in private assets, and technological innovation. How the sector responds to these challenges and opportunities could reshape the future investment landscape.
Asset managers have a pivotal role to play in securing the long-term financial well-being of Europeans, as well as driving Europe towards a more competitive, innovative, and sustainable future. To do this successfully, we need an enabling regulatory framework that encourages investment in capital markets and does not create barriers or increase complexity.”
Bernard Delbecque, senior director, Efama, added: “The decline in operating profit margins, driven by sustained fee pressures and rising costs, is a source of concern, as Europe requires competitive asset managers to serve as a vital source of stable, long-term funding for its economy. To address this, the European Savings and Investments Union must adopt an ambitious approach to ensure that asset management continues to play a central role in supporting and driving the European economy forward.”
