Assets under management (AuM) in the European fund management industry declined by 13.8% in 2022 to €27.8 trillion “mainly due to the downturn in the bond and stock markets.”

However, assets under management are expected to increase to €29 trillion in 2023 thanks to the stronger capital markets environment.

That’s according to the 15th edition of the Asset Management Report from the European Fund and Asset Management Association (EFAMA).

Almost 85% of European asset management activity takes place in six countries: the United Kingdom, France, Switzerland, Germany, the Netherlands and Italy.

At the end of 2022, investment funds and discretionary mandates assets managed in Europe totalled €15.7 trillion and €12.1 trillion, respectively, or 56.5% and 43.5% of total AuM.

Euro-area investment funds held €2.626 trillion of debt securities and €1.011 trllion of listed shares issued in the euro area at the end of 2022.

“Retail clients increased their share in total AuM from 26% in 2020 to 30%, thanks to their strong demand for investment funds in 2021 and 2022,” said EFAMA.

“Pension funds and insurance companies followed in order of importance with a share of 24% and 22%, respectively. AuM managed for domestic clients represented 68% at the end of 2022, compared to 72% in 2018.

“The share of bonds steadily declined in total AuM from 40% in 2018 to 35% in 2022. This happened in parallel with an increase in the share of equity from 28% in 2018 to 32% in 2022.

“The other categories of assets managed by asset managers are less liquid, alternative assets (26%) and cash and mony market instruments (7%).”

EFAMA Director General Tanguy van de Werve said: “Given their long-term investment horizon, institutional investors are ideally placed to finance the sustainability transition.

“By entrusting their assets with investment managers, they can benefit from our industry’s fast growing ESG expertise and engagement capabilities.”

EFAMA Senior Director Bernard Delbecque added: “To remain competitive, asset managers need to adapt their business model to benefit from AI, turn key sustainability challenges into opportunities, and deliver private market products to retail investors. In taking up these challenges, they will take an even greater role in serving the need of investors, funding European companies, and helping the transition to a greener economy.”