The 2024 edition of the Broadridge fund brand 50 report unveiled the prevailing dynamics within the global and European asset management sectors, spotlighting the challenges and shifts influenced by economic forecasts and investor behaviour. Blackrock successfully maintained its leading position in the European as well as in the Belux asset manager rankings, notwithstanding the difficulties encountered in the European environmental, social and governance sector.
The rankings, on 26 March 2024, underscored a cautious approach by European investors who favoured bank savings accounts and money market funds over other investment options amidst a backdrop of slowing growth, noted Broadridge, a financial software provider. This conservative sentiment was attributed to the scrutinisation of asset manager credentials, a reflection of the growing demand for transparency and reliability in investment strategies.
Barbara Wall, director of global distribution insights at Broadridge, acknowledged the ascent of passive management strategies as Vanguard ascended into the top 10 European rankings, highlighting its international acclaim and solid reputation. IShares also advanced, reflecting the increasing preference for passive investments. The emergence of Xtrackers in the top 50 underscored the popularity of sectoral and thematic exchange traded funds among fund selectors.
ESG downturn
A pivotal revelation from the report was the downturn faced by ESG investing. Marked by transparency issues, regulatory pressures and concerns over energy security, Broadridge called “2023 a bad year for ESG in Europe.”
Despite these challenges, the report suggested that the importance of ESG in investment decision-making remains significant, albeit amidst increased scrutiny and a call for more standardised ESG terminologies.
The decline in brand scores for asset management firms associated with ESG investments, such as Robeco, Liontrust, Nordea and Pictet, indicated a more sceptical climate towards sustainability credentials. The report hinted at further regulation as both a potential remedy and a complication for the ESG sector.
In terms of valued attributes, the report noted a shift with ‘Appealing investment strategy’ overtaking ‘Client-oriented thinking’ as the top priority for European investors, reflecting a response to the changing landscape of investor preferences. The importance of solidity, effective communication and the ability to adapt to market changes were also highlighted as key factors influencing brand attractiveness.
Among additional findings, the report observed that ESG convictions, while no longer as dominant, still play a crucial role, with 50% of the top 10 brands scoring highly in this area. The expansion into private markets and the focus on fixed income were identified as emerging differentiators and strengths for certain firms, against the backdrop of a risk-averse European investment climate which has benefitted passive investment strategies.
The Broadridge study, now in its 13th year, draws on over 1,200 fund selector perceptions to evaluate the relative attractiveness of asset management brands across global and regional markets, including Europe, Asia-Pacific and the US.