Since we have seen a change in investment behavior of European investors between January 1, 2019, and August 31, 2024, with regard to their product preferences in the segment of long-term investment products (Please see the article: “Is there a Change in Investor Behavior in Europe” for more details), it is worthwhile to analyze how much of the assets under management are actively managed and how much of the assets are invested in passive instruments.
Since not all long-term asset types (alternatives, bonds, equities, mixed-assets, other, and real estate) are investable with passive products or have significant assets under management, this analysis will focus on the assets under management held by bond and equity products as of August 31, 2024, only.
The overall assets under management in the European fund industry stood at (€15.6 tr). 23.02%, or €3.6 tr, of the overall assets were held by bond funds, while 43.37%, or €6.8 tr, were held by equity funds.
Graph 1: European Fund Industry – Market Share of Assets Under Management by Product Type (August 31, 2024)
Source: LSEG Lipper
Within the segment of bond funds, the vast majority of the assets—€2.8 tr or 76.73% of the overall assets within bond products—are invested in actively managed mutual funds, while index tracking mutual funds held €439.6 bn (12.25%) and ETFs held €395.0 bn (11.01%).
Despite all the noise around ETFs, the majority of the assets under management in the segment of equity products €4.0 tr, or 58.95%, of the overall assets within equity products are invested in actively managed mutual funds, while index tracking mutual funds held €1.4 tr (20.42%) and ETFs held €1.4 tr (20.63%).
The numbers above clearly show that the majority of assets under management in bond and equity products in the European fund industry are actively managed. Nevertheless, the numbers also show that passive products enjoy an increasing market share driven by strong inflows in these products over time. In addition, these numbers also show that the market share of passive products is much higher in the segment of equity products than for bond products. This is caused by the fact that the European ETF industry has just begun to offer bond products on a wide scale in the past few years. As for this, it is to be expected that passive bond products will see an increasing market share over the next few years since the promoters are offering increasingly different strategies to investors which should, under normal market conditions, lead to higher inflows and as a result to a higher market share for these products.
This article is for information purposes only and does not constitute any investment advice.
The views expressed are the views of the author, not necessarily those of LSEG Lipper or LSEG.
