The European investment fund industry was responsible for €20.7tn at the end of 2023, up from €19tn 12 months earlier, according to EFAMA’s Fact Book 2024.
The 22nd edition of the annual publication from the European Fund and Asset Management Association stated that, of this total, €13.1tn were in UCITs and €7.5tn in alternative investment funds (AIFs). Net sales, it added, were also up considerably, rising to €237bn at the end of last year from a fall of €222bn the year before.
Fact Book 2024 picked out six significant developments in the UCITs and AIF markets in 2023, including positive average annual performance of all major types of UCITS; and that, while net sales of AIFs returned to positive territory, they remained relatively muted.
It also noted: UCITS net assets increased by 10% in 2023, while AIFs grew by 7%; large funds were becoming increasingly important in the UCITS market; passive UCITS were steadily gaining market share; and, over the past five years, the average cost of long-term active UCITS had consistently decreased.
US allocations double in 10 years
According to EFAMA, the share of US stocks in the asset allocation of equity UCITs had risen sharply over a decade – doubling from 22% to 44% in that time. It suggested this shift could in part be attributed to US stockmarkets outperforming those in Europe in recent years – particularly with the notable success of large US technology stocks. Another contributing factor, it added, was the strong demand for funds tracking global indices, which have considerable exposure to US stocks.
The association also wrote that the proportion of bonds with a maturity of less than one year in the holdings of bond UCITS had doubled from 6% in 2013 to 12% in 2023. Concurrently, EFAMA added, there was a decline in the share of bonds with maturities between three and 10 years from 53% in 2013 to 45% in 2023. The flattening of yield curves in 2022 and their inversion in 2023 were, it said, pivotal factors in this adjustment.
On AIFs, meanwhile, the Fact Book author’s wrote: “While the share of directly-held bonds in the asset allocation of euro-area AIFs declined up to 2022, allocations to directly-held equity fluctuated in line with stockmarket trends. Conversely, the share of investment funds held by AIFs rose steadily in recent years. This trend suggests AIF managers are increasingly relying on the expertise of other fund managers and making more use of passive funds and ETFs in their asset allocation decisions.”
