European investors pulled back from long-term mutual funds as the market environment and the general sentiment turned negative. As a consequence, May was the first month posting net outflows from long-term mutual funds after 16 consecutive months showing net inflows. That said, European fund promoters still enjoyed net inflows into mixed-asset funds (+€2.5 bn), followed by commodity funds (+€1.4 bn) and alternative UCITS funds (+€1.4 bn) as well as real estate funds (+€0.4 bn), while net flows to “other” funds (-€0.8 bn), equity funds (-€7.4 bn) and bond funds (-€15.9 bn) were negative. These fund flows added up to overall

Our financial services industry is to be commended for its ability to evolve and adapt. It is dynamic, innovative, and even exciting. Ongoing regulatory initiatives after the Global Financial Crisis have greatly improved the investment product-delivery chain, the quality of investor advice and product understanding has risen considerably and with an increasingly complex dynamic, fund managers are rising to the demands of transparency. Do retail clients need institutional-type products? I often wonder, though, if we are beginning to over-egg the pudding. Recently, I attended a fund-buyer conference where a fund on display was so complex that I was relieved to

Looking at the headline figures, the year 2016 could be considered a good year for the European fund industry, since the assets under management (+€9.4 tr) hit an all-time high at the end of December 2016. In addition, the European fund industry enjoyed net inflows of €268.7 bn over the course of 2016. But a more detailed look at the underlying data unveils some trends that could change the market environment. Assets Under Management in the European Fund Industry The assets under management in the European fund industry increased from €8.9 tr to €9.4 tr over the course of the

The chart below breaks down the European fund market by asset class as of the end of Q3 2016. Equity funds dominated the scene with a market share of 37% of the funds available for sale in Europe, followed by mixed-asset funds (28%), bond funds (21%), and money market funds (3%). The remaining 11% of “other” funds were real estate funds, commodity funds, guaranteed funds, and funds of hedge funds. Exhibit 1. Market Share of Mutual Funds Registered for Sale in Europe by Asset Type as of the End of September 2016 Source: Lipper A comparison with the assets under management

Even though the European mutual funds industry enjoyed overall net inflows of €317.7 billion into long-term mutual funds during the first nine months of 2014, it seems the industry was still in a consolidation mode at the product level. During third quarter 2014 the European fund industry created 429 new funds, but there were 324 funds liquidated and 318 merged during the same period. This meant the fund universe in Europe declined by 213 funds during the third quarter. For 2014 so far a total of 2,001 funds (1,163 liquidations and 838 mergers) were withdrawn from the European fund market,