The head of the main European fund management association called on EU fund houses to rise to the challenge of rebuilding investor trust and offering innovative products to appeal to risk-wary investors, after a year that saw significant net outflows of cross-border Ucits funds in Europe and Asia.
Net outflows of such cross-border funds totalled €20.8bn in Europe and €11.8bn in Asia in the 12 months ending in December 2008, the survey, conducted by the European Fund and Asset Management Association (EFAMA), found.
“What people would like to invest in right now is something very liquid, with a high return, which is very safe, and with a capital guarantee,” Peter De Proft, director general of EFAMA, told journalists in a conference call on Thursday.
“And of course, [which is available to them] at a very low price.”
Although a single fund offering all those benefits admittedly might not be the easiest to construct, De Proft said such types of products “will have to be launched” in order to compete not only against other new and innovative funds but against capital-guaranteed products “being offered, still, by many financial institutions which are benefiting from government guarantees” – a reference to non-fund-based financial investment instruments, such as structured products, on offer from some of the large banking groups.
De Proft’s comments came as EFAMA released the survey of 22 of its member companies, whose combined assets under management in Ucits funds total some €472bn.
Aviva Investors, BlackRock, Fidelity, Franklin Templeton, Invesco, JPMorgan Assset Management and Schroders were among the firms that participated in the survey. It was conducted with the support of Lipper FMI, the Thomson Reuters specialist fund research subsidiary.
Wider distribution sought
European asset managers are keen to widen their ranks of distribution partners, the survey found, at the same time that their distributor customers are beginning to look more closely at other factors than performance when choosing funds and fund houses, De Proft noted.
“The focus of attention has shifted,” he said.
Although such elements as transparency, how risk management is handled by the asset management companies, and the way they service their clients and help them with their marketing to their own clients “were [always] there”, they are there “in a more obvious way now”, according to De Proft.
De Proft, who was joined by EFAMA’s director of economics and research Bernard Delbecque, said the statistics thrown up by the survey were less important than the trends they highlighted.
Among the EFAMA survey’s other findings:
• Despite the significant net outflows of cross-border Ucits sales in Europe and Asia in 2008, net sales remained positive in Latin America and the Middle East, albeit at low levels.
• Ucits sales in Asia reversed into outflows only in the second half of 2008, after “it became clear that the world economy was stepping into a global recession of dramatic proportions, following the bankruptcy of Lehman Brothers”, EFAMA noted.
• Two-thirds of the survey respondents said they foresaw a recovery of net sales of Ucits funds in Europe in 2009, while 50% expected a similar recovery in Asia this year. This positive sentiment was confirmed by the figures for cumulated net inflows into Ucits in January and February, which totalled €30bn, compared to net outflows in the last quarter of 2008 of €145bn.
• Third-party distribution providers, especially third-party global banks and local financial advisers and brokers, are key partners in the Ucits distribution landscape “in all regions”.
• Asset managers see the search for new distribution partners as a key strategy in helping them to cope with the global financial downturn, alongside cost-cutting and the launching of new products.
