Europe Fixed Income Assets Management Industry

Europe Fixed Income Assets Management Market Analysis

The Europe Fixed Income Assets Management Industry is expected to register a CAGR of greater than 2% during the forecast period.

Portfolio allocations to fixed income are primarily driven by investors' expectations of returns, followed by volatility concerns and liquidity requirements. Within core European fixed incomes, investment-grade corporate bonds are primarily used to deliver returns. In contrast, lower-yielding sovereign debt includes a more operative function of liquidity and duration matching. Non-core fixed-income classes such as global high yield and emerging market debt are expected to deliver the strongest overall performance. Conversely, reflecting the return expectations noted above, global high yield and emerging market debt are sought-after sources of total return and yield generation.

On average, European institutions are allocating 56% of their portfolios to fixed income and twice their equity allocation. Two-thirds of European institutions manage their fixed income on a wholly active basis. However, there is a growing minority looking to manage core assets such as domestic government bonds passively, primarily using index funds. Half the European institutions include a fixed-income portfolio of five to ten years.

The COVID-19 pandemic highlighted the need to continue technological modernization at every investment management delivery chain level to deliver the best customer outcomes. The operating model is also increasingly focused on the importance of the Diversity and Inclusion (D&I) agenda.

Europe Fixed Income Assets Management Market Trends

Increasing Number of Exchange Traded Funds in Europe

Investors have shown a growing interest in ETFs due to their liquidity, diversification benefits, and cost-effectiveness. This demand has led to the introduction of new ETFs to meet various investment objectives. Financial institutions and asset managers are continually innovating and introducing new ETF products to capture specific market segments, asset classes, or investment strategies. The rise of thematic and environmental, social, and governance (ESG) investing has spurred the creation of ETFs focused on specific themes, industries, or sustainability criteria.

ETFs employing smart beta or factor-based investment strategies have gained popularity. These strategies go beyond traditional market-capitalization weighting, providing investors with alternative risk and return profiles. ETFs have expanded beyond traditional equity and fixed-income asset classes. New ETFs cover commodities, currencies, real estate, and other alternative investments. The European ETF market has seen the introduction of ETFs tracking specific geographic regions, allowing investors to gain exposure to markets outside of Europe. The cost-effectiveness of ETFs, typically associated with lower management fees compared to traditional mutual funds, makes them an attractive investment choice.

Bond Market in United Kingdom Aiding Market Growth

Fixed-income funds are securities funds that invest their assets primarily or exclusively in variable or fixed-income securities. The bond issuers are either governments, multinational organizations, or companies. The fund invests primarily in Euro-denominated government and investment-grade corporate bonds. Returns are predominately driven by yield curve positioning, asset allocation, sector allocation, and security selection. UK gilts and non-gilts (primarily made up of corporate bonds) outperformed global bonds, returning 9% and 8%, respectively. Growth in allocation to overseas bonds coincided with the United Kingdom's decision to exit the European Union. The net retail sales of fixed-income funds amounted to USD 357 million in December 2021.

Europe Fixed Income Assets Management Industry Overview

The report includes an overview of asset managers operating across Europe. The report covers detailed profiling of a few major companies, including their product offerings, regulations governing them, their headquarters, and financial performance. Some major players currently dominating the market are listed Legal & General Investment Management, JP Morgan, Franklin Templeton, BlackRock, and Insight Investment.

Europe Fixed Income Assets Management Market Leaders

Europe Fixed Income Assets Management Market News

• February 2023: Legal & General Assurance Society Limited ('Legal & General') announced that it agreed to a buy-in transaction with the Amey Services section of the Citrus Pension Plan ('the Plan'). It totals USD 8.05 million, securing the benefits of 70 retired and deferred members.
• November 2022: Insight Investment, a leading global asset and risk manager with USD 846.81 billion under management, was appointed collateral manager and collateral valuation agent for a USD 2.1 billion longevity swap transaction. It is between Balfour Beatty Pension Fund, Zurich Assurance Ltd, and SCOR.