Three Trends From 2020 That Might Shape The Future Of The European Fund Industry

Despite the market turbulence caused by the outbreak of the novel coronavirus and the following COVID-19 pandemic induced lockdowns of economies around the globe, the year 2020 seems to be a successful year for the European fund industry. Even as the final numbers are not accounted yet, it looks like 2020 will be the year with the second-highest overall inflows into mutual funds and exchange-traded funds (ETFs) in Europe (€449.69 bn as of November 30, 2020). That said, not all fund promoters in Europe might agree with this view, as the year showed strong fund flow trends which didn’t favor all types of funds.


While the trend towards passive products continued, some actively managed funds struggled to gather new money. Over the course of the first 11 months of 2020, roughly one-third (32.42% or €145.8 bn) of the estimated net inflows was invested in ETFs and index funds. If this trend continues it is only a question of time when the flows towards passive products will overtake the flows into actively managed products.

The second trend which has developed over the last few years was the trend towards sustainable investments. After governments and regulators increased their focus on environmental, social and governance (ESG) topics, it was not surprising that we also witness an increasing demand from investors for respective investment products. That said, it was surprising that 53.59% (€241.0bn) of the estimated net inflows for the first 11 months were invested into ESG (themed) mutual funds and ETFs. Opposite to the general flow trend, the majority of these flows (€182.2 bn) were invested in actively managed products. This means that European investors do believe in active management when it comes to the implementation of sustainable investment strategies with all the respective operational tasks such as participating in annual shareholder meetings and/or the execution of voting rights or other engagements with corporations.

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