“Ownership of Investment Funds in Europe” was recently published and the main findings are below.

Households are the largest holders of financial assets in Europe, with total holdings of €29.1 trillion at the end of 2017. About 36% of this is held in bank accounts, 46% is invested in insurance and pension products, with the remainder, 18% being held in quoted shares, bonds and investment funds.

The assets managed by investment funds held by European investors amounted to €11.7 trillion at the end of 2017, compared with €4.7 trillion at end 2008.

Insurers and pension funds have become the largest holders of European investment funds, with a combined share of 42% in 2017, compared to 32% at end 2008.

At end 2017, 32% of the fund assets held in Europe were managed by cross-border funds, i.e. funds domiciled in a European country other than the country of the investor. This compares with a market share of cross-border funds of 25% at the end of 2008.

This increase can be partly attributed to Single Market initiatives such as MiFID, UCITS and AIFM frameworks, which provided more coherent rules for cross-border distribution of investment funds.

These findings show the penetration rate of investment funds in the asset allocation of European investors and are particularly relevant in view of the European Commission’s efforts to strengthen the capacity of EU capital markets and foster retail investment under its flagship Capital Markets Union [CMU] project.

European households’ significant holdings of bank deposits and limited interest in capital market instruments emphasizes the need for CMU, a key objective of which is to offer savers additional opportunities to put their money to work.

The next step is for CMU is ensuring the successful launch of the pan-European Personal Pension Product (PEPP).

The increase in cross-border fund ownership in Europe over the past decade is a welcome development. The trend is expected to continue in the future, driven by technology-enabled access to a larger pool of foreign fund providers, as well as by the European Commission’s proposal of March 2018 on the removal of barriers to cross-border fund distribution.