Total assets under management held by European money managers fell 1.5% to €10.4 trillion ($11.7 trillion) in the first six months of 2020, as markets rebounded following the COVID-19-related downturn, according to Moody's Investors Service.
The credit rating agency and financial research company said Tuesday that it expects to keep its outlook for the money management industry in Europe at negative for the rest of the year. Moody's downgraded money managers in Europe to negative from neutral in March as assets under management, revenues, cash flows and earnings were all highly correlated to the performance of financial markets.
"The positive performance of financial markets since the first quarter of the year means management fees and margins could recover in the second half of the year," Marina Cremonese, vice president and senior analyst, said in a news release. "However, we remain cautious as market risk is still high given the slower than anticipated economic recovery from the initial coronavirus shock, as well as the strong resurgence of COVID-19 cases," she said.
The average EBITDA of firms surveyed by Moody's fell to 27% during the first half of 2020, from 30% in the second half of 2019, due to lower management fees over the period. Revenues for the surveyed firms fell 9% relative to the second half of 2019, reflecting the sector's lower average assets under management.
Still, European managers recorded net inflows of €65 billion in the first half of 2020 driven by fixed income and money market funds. The pandemic has increased investor appetite for sustainable investments as well, leading to €26 billion of net inflows in the first quarter and €54.6 billion in the second quarter, Moody's said.