UK leads European fund-of-funds market with positive investor flows and fee reductions
From Morningstar: 2025-06-17 07:51:00
The UK leads the European fund-of-funds market with assets totaling EUR 343 billion, out of a total market size of EUR 1.1 trillion. UK fund-of-funds have seen positive investor flows and fee reductions to 0.86%, driven by regulatory oversight and fee sensitivity.
Vanguard has the largest share of net assets in the European market, adding EUR 32 billion over five years. The fund-of-funds landscape is shifting towards passive investing, with US large-cap blend equities dominating portfolios. UK equity exposure is captured through passive strategies like the iShares Core FTSE 100 ETF.
The most-held equity fund in UK fund-of-funds is M&G Japan, followed by the iShares UK Equity Index (UK). On the fixed-income side, the Vanguard Global Bond Index and Man GLG Sterling Corporate Bond are popular choices. These funds meet UK demand for sustainable investing and have gained traction due to strong performance.
Luxembourg is the preferred domicile for European cross-border fund of funds. Allocation funds make up 76% of the market, with growing interest in alternatives and money market funds. European portfolios are heavily weighted towards US large-cap blend equities, with rising interest in equal-weight strategies to reduce reliance on mega-cap stocks.
Funds of funds offer diversification without the need to build individual portfolios. Traditional active fund building blocks are losing popularity in favor of passive and blended portfolios with lower fees. The rise of hybrid models combining low-cost beta exposure with selective active management is on the rise in the European fund-of-funds landscape. 1. The stock market experienced a significant drop today, with the S&P 500 falling by 2.5% and the Dow Jones Industrial Average dropping by 600 points. Investors are concerned about rising inflation and interest rates impacting economic growth.
2. The latest report from the Labor Department revealed that unemployment claims have reached a new low for the year, with only 200,000 claims filed last week. This marks a positive trend in the job market as businesses continue to hire amid the ongoing recovery from the pandemic.
3. In international news, tensions are escalating between Russia and Ukraine as Russian troops continue to build up near the border. The United States and NATO have expressed concerns over the situation and are monitoring it closely for any further developments.
4. Climate change activists are calling for urgent action after a new study showed that global temperatures are rising at an alarming rate. The report found that 2021 was one of the hottest years on record, prompting calls for stronger policies to reduce greenhouse gas emissions and combat climate change.
Read more at Morningstar: UK Dominates European Fund-of-Funds Market