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Money Management

European asset managers’ AUM down 4.1% in second half of 2018 – Moody’s

European money managers' combined assets under management fell 4.1% in the second half of 2018 due to slowing global growth, continuing trade disputes and political uncertainty in Europe, Moody's Investors Service said Thursday in a report.

The rating agency's latest analysis of 20 European money managers said total AUM fell to €9.2 trillion ($10.3 trillion) at the end of 2018.

Net outflows reduced AUM by €52 billion, compared with net inflows of €98 billion in the first half of 2018. In 2017, net inflows in the final six months of the year were €134 billion.

Seven of the 20 managers surveyed reported net inflows in the second half of 2018: Ashmore Group, Azimut Group, Amundi, Credit Suisse Asset Management, UBS Asset Management, Allianz and Legal & General investment Management.

"The industry is transitioning from a product to a service-based model, and we believe the new service model, which includes the use of technology to provide advice and improve client experience, is now taking shape," Moody's said.

Total management fee revenues fell 5% in the six-month period across the firms, reflecting lower AUM and lower performance fees, Moody's said. Fee revenue in the first half of 2018 also fell 3.5% due to stagnant AUM and lower performance fees.

New disclosure and transparency requirements announced in March by the European Commission will likely push up operational and compliance costs, weighing on profits, Moody's said. The requirements may also lead to "increased execution risk, as non-compliance could lead to fines," according to analysts who compiled the report.