EUROPE - Institutional assets under management (AuM) throughout Europe increased by 14% in 2006, but only a handful of managers consistently win business, according to a study by consultancy firm McKinsey & Company.
Presenting his study in London today, Robert Stark, principal at the firm's Cologne office, said: "Institutional growth has been driven by raw inflows, and also by 'substitution effects' across Europe, whether that is exchange traded funds, or certificates and partially unit-linked products."
He added: "Most of the growth has been driven by the market performance and not so much by the net inflows."
The European Asset Management Survey 2007 found all European countries saw AuM growth in the last year. Only Italy, Spain and Portugal, experienced outflows.
The strongest markets in terms of growth over the past few years have been the UK, Scandinavia and France, with €87bn, €59bn an €71bn in institutional assets under management respectively in 2006, according to Stark.
Moreover, the study also identifies major trends that will significantly impact the asset management industry, including distribution opening up, the unbundling of alpha and beta strategies as well as increasing regulatory attention.
That said, despite Europe's changing distribution environment, the market is not open to everyone and only a few players, such as Merrill Lynch and JP Morgan, consistently win mandates, said Stark.
He added it is mostly US firms who are gaining business as opposed to local, European firms.
David Gasparro, head of distribution at UK asset manager Threadneedle, commented the market is currently not as strong in terms of new money coming in.
He added: "There are always only a few winners in any one market."
Stark concluded the historic distinction between hedge funds, private equity, life insurers, asset managers and investment banks will become fully obsolete in the future.
He estimates the number of boutique players will boom, while there will be between five and 10 European "mega players" with more than €1trn in assets under management, while there will be a high level of outsourcing of beta top a handful of global passive specialists.