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UK houses focus on Europe

A major British incursion into mainland Europe is afoot in the asset management industry.

The recent results season for asset managers contained numerous hints that Europe is taking centre stage on the sales agenda.

Take the August 1 half-year results of Hyde Park Corner-based British stalwart Jupiter Fund Managers. “Net sales of Ucits funds across Europe showed significant strength in the first quarter,” they said.

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“While we continue to believe that our core UK market offers significant long-term opportunities for growth, our international distribution efforts are becoming an increasingly important contributor to the group,” said chief executive Edward Bonham Carter.

Interim results from City-based giant Henderson Group on August 8 adopted a similar slant. “In Europe, our Sicavs, particularly European Corporate Bond, Global Property Equities and Global Technology, generated over £400m of net flows in the first half,” they said.

Behind the scenes, asset managers such as these have been concentrating an increasingly large share of their distribution resources in European markets.

Head of ‘EMEA’ – Europe, the Middle East and Africa – sales jobs have been established as the battle to get British asset management brands into the minds of European investors has hotted up.

And there are signs that the British invasion is taking hold. A recent survey of cross-border fund sales by Lipper revealed that, after suffering outflows in 2011, UK-based asset managers received cross-border inflows of ¤33.9bn in 2012 – the highest amount of any nation after the US.

Greg Jones, Henderson Group’s head of distribution for Europe, the Middle East, Asia and Latin America, says European distribution has been a major part of the firm’s plans for the future for some time.

He says he has seen inflows from the Continent surge from ¤3bn to ¤10bn since he joined the firm in December 2009, in spite of the fact the firm was once told that European investors “would never buy an Oeic” –the structure used for UK-based funds.

The group’s Credit Alpha and European Special Situations Oeic-structured funds have now both been registered for distribution in Europe and have euro-denominated share classes, he says.

But what is driving this very recent surge in focus across the Channel?

Mr Jones says the key is that investors tend to fixate on their domestic markets.

In recent years the aftermath of the global financial meltdown has sent the eurozone’s markets into severe falls, after several of the region’s ‘peripheral’ governments – such as Portugal and Greece – have teetered on the brink of insolvency.

That crisis brought the future of the single euro currency itself into question.

But European stockmarkets have rallied sharply in recent months, on the back of a promise from the region’s top central banker to do “whatever it takes” to protect the future of the single euro currency, which many took as a sign the crisis was resolved and markets were oversold. This turnaround in market sentiment has driven Europe’s fund investors, who – like most global investors – are naturally inclined to invest heavily in their home markets, to return to investing once again.