The largest European retail fund markets made only modest recoveries in 2023 after massive declines in 2022. Investors turned towards cash and domestic products rather than third-party funds. In Spain, the share of assets managed by foreign managers reached its lowest level since 2019. The French market continues to be dominated by domestic asset managers. But opportunities remain for third party distribution, particularly in Germany and Italy.
Germany probably provides the best distribution opportunities for fund groups in continental Europe, with independent wealth manager and financial adviser channels that are very open to third-party funds. Large banking networks and private banks also continue to offer valuable opportunities. Equity fund allocation at over 40% shows that German investors are less risk-averse than people in other continental markets. Multi-asset funds continue to grow in popularity and now make up over a quarter of fund assets. A B2C distribution route featuring digital banks and the largest robo-advice market in Europe further reinforces Germany’s position as the most rewarding market for fund groups.
Italy is also promising for foreign funds, whose popularity has grown over the last decade. Adviser networks, unique to the Italian distribution ecosystem, represent over a quarter of total fund AUM. Growth has been supported by leading networks reverting to the face-to-face advice that Italian consumers seem to favour. Flows through the private banking arms of the large banking groups have also been resilient as has demand for insurance products, thanks to the popularity of Ramo III (unit-linked) products.
Germany and Italy highlight how European retail fund distribution varies from market to market. Opportunities remain for third-party funds – always assuming that providers understand and adapt to the different characteristics of each market.