03.04.2014
By Terry Flanagan

BlackRock and JP Morgan Top European Fund Sales

BlackRock and JP Morgan had the largest fund sales in Europe last year as US firms are investing to increase their market share in the region.

BlackRock topped the rankings of European fund sales last year with €32bn of inflows with JP Morgan in second place with €21bn according to The European Fund Market Review from Lipper and Thomson Reuters. The study was based on data as at 31 December 2013 using fund flows information in the Lipper FundFile database.

The report said: “However, given that this figure includes a substantial book of passive business, JP Morgan should be considered the top active house.”

The study said the “most notable omission” in the league table is Pimco, the California-based fixed income manager: “In light of the bond tapering scare, recent poor performance of their flagship fund and the departure of CIO/CEO Mohamed El-Erian, they have slipped from number one in 2012 (€35bn) to outside of the top 25 for 2013.”

Last year there were net sales of €183.5bn into mutual funds in Europe with €96bn into bond funds, €92bn into equities and €85bn into mixed- asset funds.The flows changed from 2012 which was dominated by sales into bond funds, especially after Federal Reserve started to mention tapering of quantative easing in May and June 2013.

The report said: “Interestingly, investors didn’t cash in their chips with bonds, but rather de-risked within the sector – moving out of emerging markets debt and local currency bonds into better rated global currency and western high yield bonds.”

Ernst & Young’s 2013 survey of asset management operations said US managers are expanding their brands in Europe to improve distribution channels. The report said: “US firms rebounded from the financial crisis more quickly that their European counterparts and are investing significantly in marketing and brand awareness in Europe in an effort to increase market share.”

European-based fund managers are spending more than half of their operations budgets on compliance-related functions as they have to deal with local country, European Union and global regulations from the US Securities and Exchange Commission and Internal Revenue Service.

“In Europe, despite limited revenue growth firms must continue to invest in infrastructure changes to comply with new regulations,” added Ernst & Young. “For some firms, the sheer number of regulatory changes is hindering competitiveness by limiting their ability to plan forward-looking operating model changes.”

Ernst & Young surveyed chief operating officers and heads of investment operations at 40 asset managers in the Americas and Europe with the majority managing between $50bn and $500bn.

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