Germany has solidified its top spot in Europe’s retail fund market, according to the latest European Central Bank data.
By the end of March 2023, private German investors had amassed investment fund shares worth €1 trillion, marking a substantial 27% of the total fund holdings for private households across the European Union and the UK.
Close competitors, Italy and Spain, held assets valued at €668 billion and €407 billion, respectively. Together with Germany, these nations account for over half of the total private investor fund assets in Europe. Meanwhile, the UK and France, both recognised players in the institutional sector, each reported around €320 billion in assets.
The data further showed the prevalence of foreign funds across Europe. In Italy, foreign funds constitute approximately 70% of total holdings. Both Germany and Belgium hold foreign funds, making up over 50% of their total, whereas Denmark’s investments remain primarily domestic.
The vast array of fund choices available to German investors is attributed to the extensive cross-border distribution. In addition to 3,200 domestic funds, Germans have access to 11,000 foreign Ucits funds and another 5,300 alternative investment funds (AIFs) from within and outside the EU.
The German banking system, including savings, cooperative and private banks, was responsible for 59% of total retail fund distribution. In contrast, direct sales to investors remained a less common method of distribution.
The topic of commissions in the fund market remains a point of discussion. Over the past decade, German per capita fund investments stood at €6,100, compared to €3,650 in EU countries without commission bans. The recently published August 2023 BVI study ‘Effects of bans on inducements revisited‘ highlighted the impact of commission bans on investment patterns.
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