Various mergers amongst Luxembourg-domiciled asset managers, big and small, means we can expect a temporary oversupply of products in the market followed by fund closures and repurposing, Detlef Glow, head of EMEA research at financial data provider Refinitiv Lipper, explains to Delano.

Giant deals such as asset manager Amundi’s planned €825m acquisition of Societe Generale’s asset management arm Lyxor, announced in spring 2021, will create Europe’s biggest exchange-traded fund, but also a flood of smaller ones. “[Amundi and Lyxor] have a lot of ETFs tracking the same index. Once the ink has dried on the deal, we can expect some fund liquidation across both active and passive ranges,” says Glow.

As well as liquidation, the current trend towards environmental and social governance could see some funds repurposed with the ESG benchmark applied and the asset mana­gement approach changed retrospectively. An advantage for fund managers is that they don’t have to gather new assets and they can retain existing investors, particularly those that demand more green in their portfolio.

Meanwhile, recent aggressive fund marke­ting is forcing the closure of funds that fail to live up to overhyped performance promises. “People are pulling their money from products that promised no negative performance and the funds have to close. We’re particularly seeing this in absolute return, alternative Ucits assets and mixed-asset funds.”