US asset managers dominate European market, doubling assets over decade

A “super league” of American asset managers is rapidly expanding its influence across Europe and the UK, more than doubling assets under management (AUM) in the region over the past ten years and significantly outpacing local competitors.

Leading US firms such as BlackRock, Vanguard, and JPMorgan Asset Management collectively oversaw $4.9 trillion in assets by the end of May, up from $2.2 trillion a decade earlier, according to data from ISS Market Intelligence, Financial Times writes. 

This growth starkly contrasts with the asset growth of domestic European markets: the UK’s AUM rose from $1.2 trillion to $2 trillion, France’s from $870 billion to $1.5 trillion, while Switzerland and Germany each roughly doubled to $1.4 trillion.

These figures, covering mutual funds and exchange-traded funds (ETFs) but excluding money market, fund of funds, and private market products, underscore the mounting challenge European players face from their larger US rivals.

“We’re seeing the emergence of a ‘super league’ of asset managers that have broken away [from the rest of the industry] — dominated by US firms and alternative asset managers, who also are growing share in Europe,” said Huw van Steenis, partner and vice-chair at consultancy Oliver Wyman.

The growth of low-cost passive funds, particularly ETFs and index trackers, has propelled BlackRock and Vanguard to dominance in the European market. BlackRock manages $1.4 trillion in European ETFs and index funds, while Vanguard — which established its London office only in 2009 — controls $442 billion.

“The three largest US firms by assets under management collectively hold a 50 per cent market share among all US firms operating in Europe,” noted Jinesh Shah, associate director at ISS Market Intelligence.

Manny Roman, CEO of California-based Pimco, highlighted the growing importance of passive investing, stating: “The rise of passive has been a one-way trend” in equities and warned, “if you’re a midsized equity manager in Europe, and you don’t have the size of the US market to help you, it looks incredibly bleak.” Nonetheless, he emphasized opportunities for active management, adding, “We have very senior people in Europe and we think the opportunity . . . to add alpha is quite large.”

Felix Wenger, senior partner at McKinsey, attributed US dominance to their leadership in “faster-growing asset classes” such as passive funds and private markets, fueled by “the largest capital market and more wealth creation.” He said Europeans face the dual challenge of consolidation and innovating new competitive strategies: “Europeans will need to consolidate to gain scale — but more importantly, to compete differently.”

Despite the surge of US players, several well-established European asset managers, including UBS, Amundi, and DWS, continue to hold significant shares of the domestic mutual fund and ETF markets.

JPMorgan Asset Management CEO George Gatch sees an opportunity amid the rise of cheap passive funds, noting that “there’s less strongly resourced managers competing in the active space,” which allows his firm to “put every ounce of our resources and capabilities into outperforming markets.”

Similarly, Onur Erzan, head of AllianceBernstein’s global client group, expects a shrinking number of winners in active management as passive funds expand: “Being headquartered in the US is an advantage,” he said, pointing to the ability to “use that scale to build a global franchise” that supports its European business.

The continued dominance of US asset managers occurs even as many large investors seek portfolio diversification outside the US, often viewing European stocks as more attractively priced.

Sarah Melvin, head of BlackRock’s European client business, said that investors valued the firm’s expertise across public and private markets, especially when “navigating recent market volatility.”

The landscape of European asset management is clearly shifting, with US giants leading the charge and European firms facing pressure to innovate and consolidate to maintain competitiveness.

By Sabina Mammadli