A quiet power shift is underway in the European fund industry. Investors are increasingly gravitating towards larger Ucits vehicles, favouring scale, simplicity and cost-efficiency over specialisation and boutique appeal.
As this structural trend gathers pace, it is redefining what success looks like in fund management while placing new pressure on smaller players to adapt or consolidate.
The 2025 edition of the Fact Book published by the European Fund and Asset Management Association (Efama) reveals that funds managing over 1 billion euro now dominate the Ucits landscape, while the smallest funds — those with less than 100 million euro in assets — have seen their market share dwindle to under four percent.
According to Efama, the flight to scale is closely tied to two reinforcing developments: the steady decline in fund fees and the explosive growth of passive investment products, particularly ETFs and money market funds,
Costs continue to decline
Average costs across all major Ucits categories continued to fall in 2024. Equity Ucits became 21 percent cheaper over the past four years, now charging 0.75 percent on average. Bond Ucits dropped to 0.56 percent, while multi-asset funds, though still the priciest, now average 1.16 percent.
ETFs in particular are driving the reshaping of the European fund map. They posted a record year for net inflows, led by equity ETFs, while traditional actively managed equity Ucits suffered another round of outflows. Passive strategies as a whole now represent close to a third of the Ucits market, up sharply from a decade ago.
Retail investors also returned in force. After a brief pause in 2023, when national governments diverted savings flows into sovereign bonds, households across Europe resumed buying investment funds. Luxembourg, in its role as a leading cross-border fund domicile, remains a key entry point for these flows.
Mixed results for sustainability
The sustainable finance segment showed more mixed results. Funds classified under SFDR Article 9 experienced net outflows for the first time, reversing their strong performance in earlier downturns. In contrast, Article 6 and 8 funds regained momentum, boosted in part by the surge in ETF and MMF issuance that tends to fall outside Article 9’s stricter sustainability criteria.
Considering all developments, Efama director general Tanguy van de Werve said the industry has arrived at a pivotal moment.
“Fund concentration is increasing, asset allocations are shifting, and fund costs continue to decline,” he said in a statement. “While sustainable finance faces headwinds, retail investors are stepping up their engagement, an encouraging sign for the success of the Savings and Investment Union. Key to that success will be the preservation of Ucits as a gold standard and the promotion of lifecycle investment strategies for retirement savings.”