Financial Services Ireland

Thought Leadership

Eurozone Forecast: Asset Management Outlook

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The Eurozone recovery is expected to gather momentum from 2014 and GDP is expected to reach 1.6% growth per year from 2016 to 2018. But financial services still face challenges from ongoing low interest rates, high unemployment, and the regulatory agenda.

European asset managers are casting their net wider than ever in the search for attractive yields. Over the next five years assets under management (AUMs) in the Eurozone are forecast to increase by 24%, helped by improved investor confidence and a retreat from emerging markets. Bond funds continue to lose ground to equity funds as risk appetite improves and in 2013-18 bond funds are expected to grow by only 6%, compared with growth of 50% in the same period for equity funds. Solid gains of 56% in 2013-2018 are also forecast for multi-asset funds, and while hedge fund AUM should start to grow this year, by 2018 they will still be 21% below their 2007 peak. Hedge fund managers are expected to outsource functions to cut costs. Smaller member states such as Ireland and Luxembourg are expected to continue to lead growth as host centres for fund management.

Asset management sector highlights

•  Assets under management (AUMs) in the Eurozone are expected to increase by 6.6% in 2014, and 24% over the next 5 years to reach €6.1t.

•  We expect AUMs in bond funds to grow by just 6% in 2013–18, while equity funds will experience growth of 50% in the same period.

•  As risk appetite continues to improve, we expect multi-asset funds to grow rapidly, with AUMs rising by 56% from their 2013 level to reach €722b by 2018.

•  AUMs in hedge funds should start to grow again from this year. But the €37b AUMs forecast for 2018 will still be 21% below the 2007 peak.

Donal O’Sullivan

FS Partner, Tax
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