(Finance) – The European investment managers they have to face challenges in maintaining and growing their assets under management (AUM) due to market uncertainty and increased competition for customer savings amid higher interest rates. This was stated by Fitch Ratings in a new report on the subject.
The rating agency points out that the market volatility could put pressure on investment performance, net inflows and, therefore, fee income.
It points out that asset management players had a tough year in 2022, with AUM declining year-on-year. The declines were led by declines in bond and equity markets, while i net new capital flows they were moderated in institutional channels and mass retail due to investor risk aversion, but they were strongest in investment managers focused on affluent clientsas Azimuth And Mediolanum Bank.
Fitch points out that the pressure on EBITDA margins fees driven by ongoing fee competition, cost inflation and declining AUM.
Furthermore, traditional investment managers with smaller, more concentrated franchises or higher leverage are more exposed to deterioration of financial metrics and rating actions.