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Strong financial markets bolster fees for European asset managers

Publication Date: 26 Apr 2018 - By Gaurav Sharma (Editor ReachX) By Gaurav Sharma (Editor ReachX)
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Macro Equity Fundamental Multi Asset UK EU ex-UK Financial Services

The combination of strong financial markets, industry consolidation and net fund inflows helped bolster total management fees for Europe's asset managers in the second half of last year, according to Moody’s. 

In a report for its clients, the ratings agency noted that total management fees across its surveyed group of European asset managers rose 12.7% in the second half of 2017 compared with end-June 2017. 

Excluding M&A transactions, Moody's estimates that overall fee revenue increased by 6%. Marina Cremonese, a Vice President and Senior Analyst at Moody's, said: “About half of the increase in fees we recorded was due to the acquisition of asset managers previously outside of Moody's surveyed group, for example the Janus-Henderson merger and the acquisition of Pioneer by Amundi. 

"However, the other half is down to market appreciation, higher performance fees, as well as positive net flows."

Bank-owned asset managers recorded the increase in total largest management fees, as their fees rose 18%, as the group continues to benefit from the banks' extensive distribution networks. These also provide some insulation against fee pressure, despite a change in the asset mix towards passive strategies, which typically generate lower fees.

Sales momentum continued for the surveyed group during the period, with net inflows reaching €135 billion, equivalent to 1.5% of assets under management at the beginning of the period. This compares with net inflows of €30 billion in H2 2016. Only three of the 21 managers surveyed reported net outflows in H2 2017. 

 

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