€21 Trillion and Counting...

Europe’s fund industry continues to thrive

The European Fund and Asset Management Association (EFAMA) represents through its 28 member associations and 62 corporate members, some €21 trillion in assets under management, of which €12.6 trillion was managed by 56,000 investment funds at the end of  2015. Just over 30,000 of these funds were UCITS (Undertakings for Collective Investments in Transferable Securities) funds, and the remaining 25,900 funds were AIFs (Alternative Investment Funds).  EFAMA Director-General Peter De Proft, who was in Nicosia to address the International Funds Summit at the end of May, spoke to Gold about the Association and the industry it serves.

By Voula Loizou

Gold: How has EFAMA grown over the years and what are its plans for future development?

Peter De Proft: Some 7-8 years ago, we had 32 corporate members and now we have 62 after all the mergers. Most of the European national associations are members and I would say that we represent the whole of the European asset management industry. Over the last six years we have started to accept associate members and we still hope to include more corporate members so that there are more present around the table in discussions with European regulators and legislators. There has been quite an evolution in the sense that we are often asked to participate in open hearings now, which means that we are indeed seen to be the representative body of the industry. Of course, it is a challenge, too, because we have to keep coming up with opinions!

Gold: How has the European fund industry evolved in recent years?

P.D.P.: There has been tremendous growth and the industry has basically doubled in size over the last 7-8 years. It has grown in importance to represent more than €21 trillion in assets. That's an impressive number! The US industry is about 50% of the world market and Europe is 35%, so it’s huge.

Gold: With interest rates at all-time lows in many countries, how have investment strategies changed?

P.D.P.: We have seen greater investment in equities in recent years and, at the same time, the development of passive funds but they still represent only a small part of the market.

Gold: What are the other key challenges and trends in the asset management sector?

P.D.P.: The key challenge is the implementation of all the legislation and the different measures. There are so many regulations and there are more than 300 technical standards, so putting all that into practice is a huge task.

Gold: Are there regulatory reforms that can be implemented to overcome these challenges?

P.D.P.: There is an impact assessment that is currently being conducted by the European Commission and I think this is very important in the sense that it is trying to assess whether there are overlaps and how they can be dealt with. Personally, I think this is a very good reaction. What we’re seeing is a positive approach.

Gold: What are the current risks and opportunities for investors in the current market environment?

P.D.P.: There are always risks for investors and there are always opportunities. In my opinion, they should be aware that there is no such thing as ‘market timing’. An investor needs to be investing small amounts on a regular basis. This is something that people need to be aware of, especially those of the younger generation. To build up a buffer, they have to start very early and invest on a regular basis. That's the only way to do it. They should not be trying to have ‘market timing’ – successful investing doesn’t work like that.

Gold: What are your predictions and expectations for the European fund industry over the next 5 years?

P.D.P.: We are now going through a phase of restructuring in the industry and, taking into account everything and the difficult market environment, my expectation is that we will become a key factor in the development of the capital markets as capital providers.