Being successful on the European AM market

In its ninth consecutive years, Europe’s asset management industry has enjoyed a record performance. In their article Full speed ahead in European asset managementMcKinsey identifies the three types of asset managers that have been particularly successful.

Net flows from Europe’s asset managers were among the highest in the world: With assets under management rising by eight per cent to €22.5 trillion, net new inflows from clients came to €581 billion complemented by a five per cent gain from market performance. Peak AuM levels could be converted to revenues and profits for European asset managers, which have set a record in 2017. From 2007, revenues have increased by 56 per cent, and profits now stand at 13 basis points of average AuM or 37 per cent of revenues. 

In a challenging environment with changing expectations of clients, the impact of advanced analytics, and the shift away from active asset management, three types of asset managers have been particularly successful in attracting new business and realising higher growth and profitability:

  • At-scale firms with broad product lines, extensive marketing and global client relationships utilising low-cost structures;
  • customer-focussed marketers gaining in-depth knowledge of customers and providing superior value;
  • and alpha generators utilising innovative investment processes to generate superior value.

“The rest of the managers are stuck in the middle strategically, consigned to the bottom ranks of profitability,” argues McKinsey.