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Europe's investment funds scale new heights

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Assets and inflows to European investment funds broke records last year as the bull market continued in fixed income and equities.

European fund assets hit a record €15.6tn in 2017, according to statistics from the European Fund and Asset Management Association, the trade body.

This was driven by strong growth in both Ucits (undertakings for collective investments in transferable securities), whose assets rose 12.2 per cent year on year to €9.7tn, and alternative investment funds, which rose 7 per cent to €5.9tn.

Ucits provide a single European regulatory framework for an investment vehicle. This means a fund can be domiciled in one country but sold across the bloc. Efama collected data from 29 countries.

Efama also worked out that this equated to investment fund assets for each EU resident growing more than 10 per cent to €30,097.

Inflows were almost €1tn, with more than three-quarters of this, €760bn, going into Ucits funds as the investment vehicles benefited from rallying markets.

This was a record even though the US Federal Reserve and the European Central Bank plan to tighten monetary policy following a decade of historically low rates.

Bolstered by accelerating growth in the US, Europe and Asia as well as recovering commodity prices, many global indices recorded their best annual performance last year since 2008.

Greater optimism on the risks stemming from Brexit and the election of Donald Trump as US president also helped drive the rally in stock and bond markets.

However, there are jitters over whether the three-decade bull run in bonds is nearing an end and heightened concern over equity markets following a bout of volatility, which burnt many investors at the beginning of the year.

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