Managed investments in Europe
23 Jul 2025
The household wealth that is tied up in bank deposits across the EU has long been seen as a crock of gold by leading asset managers. Andrew Hutchings discusses what are the main developments to look for in the year ahead
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The idea that huge quantities of money could move from deposits with Europe’s banks and into managed investments is not a new one. However, it is one that is getting more attention at the European Commission (EC).
Umar Ahmed, director of EU affairs at Irish Funds, notes: “Remember that there are two major objectives. One is direct funding of the EU economy. The other is getting people to invest more. Each of these objectives is worthwhile in its own right.”
He argues that there is a sense of urgency among policymakers that had not existed as recently as early 2024. “The Capital Markets Union project has been renamed, and is now known as the Savings and Investment Union project. Specific proposals have been outlined in the reports prepared by Mario Draghi and Enrico Letta.”
Ahmed suggests that political momentum in favour of the project has increased dramatically. “There is a widespread feeling that the project will be completed under the current Commission — if it is to be completed at all. We have found in discussions that finance ministers are much more knowledgeable about the project than they had been previously.”
Corinne Lamesch, general counsel and deputy CEO of the Association of the Luxembourg Funds Industry (ALFI) anticipates that there will be a wave of white papers and suggestions from asset management trade associations — including ALFI — through the first half of 2025 in response to the consultation by the Commission on the Saving and Investment Union. ALFI’s response can be found on its website.
“According to our data, household wealth in the European Union amounts to €33.5 trillion or so. Of this, about €10 trillion or so is held in cash. Mobilising that money so that it moves out of bank deposits and into investments is, of course, the big challenge.”
She suggests that more can be done to promote an investment, as opposed to a savings culture.
“Changes need to be made to the EU’s Markets in Financial Instruments Directive. Younger generations should be mobilised. It should be easier for minors to make their own decisions. Savings accounts for children should be promoted.”
Lamesch also advocates the development of pan-European second-pillar pensions products.
“The market is currently very fragmented. Products are only available in their home countries and not across the EU as a whole. There should be, among other things, better tailored long-term products and more auto-enrolment.”
She believes that there should be greater promotion of products that offer higher returns and risks. “Tax incentives should be offered to boost private equity and venture capital funds. A pan-European Individual Savings Account would also be helpful.”
Irish Funds’ Ahmed considers that moves by the EC and national governments to promote investments will “put more wind into the sails of passive ETFs. The rate at which they advance will depend on the various tax incentives.”
He notes that the prospects for active ETFs are impacted by official scrutiny of fees that are being charged. “There have been politically charged discussions about distribution and inducements.”
ALFI’s Lamesch takes the view that ETFs are an additional distribution channel rather than a product and that both active and passive investing are here to stay.
“The challenge with passive investing is the massive concentration of money into a small number of very large stocks.”
“In Luxembourg, there have been changes to regulations to make the Grand Duchy more attractive as a domicile for active ETFs. They are exempt from the subscription tax. Since December, new rules have meant that active ETFs do not need to publish holdings on a daily basis. Instead, they publish monthly, with a one-month lag.”
Both Ahmed and Lamesch agree that artificial intelligence will play a greater role in the distribution of managed investment products.
Ahmed suggests that there will likely be further investigation into how AI-driven robo-advice can promote the Savings and Investment Union project.
For her part, Lamesch envisages that there is some potential for AI-driven chatbots to provide guidance, although not comprehensive advice on investments.
“It is also possible that chatbots could help investment advisors — and not just their clients. AI will have a role to play within investment companies — in the automation of routine tasks. People will have more time to focus on activities that really add value.”
Regardless of the success (or lack thereof) of the Savings and Investment Union project, the relative prospects of active and passive investment and the impact of AI, several different forces will likely have an impact on the competitive landscape of Europe’s asset management industry.
Ahmed emphasises that pressures on prices and margins across financial services have been downwards over the last 25 years. This has been true in almost all markets globally, not just in Europe. “EU officials are, in general, keen for there to be further consolidation of fragmented markets for asset management and other services. However, national governments will still prefer local champions. Note the discussions over the proposed merger between Commerzbank and Unicredit, for instance.”
Lamesch suggests that rising demand for new product types will generate opportunities for companies that provide them and distribute them. “The new European Long-Term Investment Funds are rising in importance, thanks to growing demand from high-net-worth individuals and mass affluent investors.”
“One should also look out for the further development of private assets. Luxembourg is currently home to about €4.6 trillion in undertaking for collective investment in transferable securities funds and another €2.2 trillion in private assets funds that are focusing on private equity, venture capital, private debt, and real estate.”
In short, 2025 should be a good year for the providers and distributors of managed investments in Europe. For a long time, the asset management industry has seen the huge amount of household wealth that is sitting in bank deposits as a crock of gold that is tantalisingly close but frustratingly out of reach. This could well be the year in which — to continue the metaphor — the asset managers actually grasp the gold. This should be the case virtually regardless of what happens to global economies and markets.
As noted, there is a greater sense of urgency among decision-makers at the EC and in national governments to promote investments as opposed to savings. This is perhaps the biggest difference between now and a year ago. However, initiatives from the asset managers and fund distributors are also important. New and attractive products are being developed.
The costs of these products are, in the main, moving downwards — or in favour of the ultimate investor. Dealmaking will likely drive further consolidation — and possibilities for economies of scale. AI will likely also have a positive, if marginal, impact.
Umar Ahmed, director of EU affairs at Irish Funds, notes: “Remember that there are two major objectives. One is direct funding of the EU economy. The other is getting people to invest more. Each of these objectives is worthwhile in its own right.”
He argues that there is a sense of urgency among policymakers that had not existed as recently as early 2024. “The Capital Markets Union project has been renamed, and is now known as the Savings and Investment Union project. Specific proposals have been outlined in the reports prepared by Mario Draghi and Enrico Letta.”
Ahmed suggests that political momentum in favour of the project has increased dramatically. “There is a widespread feeling that the project will be completed under the current Commission — if it is to be completed at all. We have found in discussions that finance ministers are much more knowledgeable about the project than they had been previously.”
Corinne Lamesch, general counsel and deputy CEO of the Association of the Luxembourg Funds Industry (ALFI) anticipates that there will be a wave of white papers and suggestions from asset management trade associations — including ALFI — through the first half of 2025 in response to the consultation by the Commission on the Saving and Investment Union. ALFI’s response can be found on its website.
“According to our data, household wealth in the European Union amounts to €33.5 trillion or so. Of this, about €10 trillion or so is held in cash. Mobilising that money so that it moves out of bank deposits and into investments is, of course, the big challenge.”
She suggests that more can be done to promote an investment, as opposed to a savings culture.
“Changes need to be made to the EU’s Markets in Financial Instruments Directive. Younger generations should be mobilised. It should be easier for minors to make their own decisions. Savings accounts for children should be promoted.”
Lamesch also advocates the development of pan-European second-pillar pensions products.
“The market is currently very fragmented. Products are only available in their home countries and not across the EU as a whole. There should be, among other things, better tailored long-term products and more auto-enrolment.”
She believes that there should be greater promotion of products that offer higher returns and risks. “Tax incentives should be offered to boost private equity and venture capital funds. A pan-European Individual Savings Account would also be helpful.”
Irish Funds’ Ahmed considers that moves by the EC and national governments to promote investments will “put more wind into the sails of passive ETFs. The rate at which they advance will depend on the various tax incentives.”
He notes that the prospects for active ETFs are impacted by official scrutiny of fees that are being charged. “There have been politically charged discussions about distribution and inducements.”
ALFI’s Lamesch takes the view that ETFs are an additional distribution channel rather than a product and that both active and passive investing are here to stay.
“The challenge with passive investing is the massive concentration of money into a small number of very large stocks.”
“In Luxembourg, there have been changes to regulations to make the Grand Duchy more attractive as a domicile for active ETFs. They are exempt from the subscription tax. Since December, new rules have meant that active ETFs do not need to publish holdings on a daily basis. Instead, they publish monthly, with a one-month lag.”
Both Ahmed and Lamesch agree that artificial intelligence will play a greater role in the distribution of managed investment products.
Ahmed suggests that there will likely be further investigation into how AI-driven robo-advice can promote the Savings and Investment Union project.
For her part, Lamesch envisages that there is some potential for AI-driven chatbots to provide guidance, although not comprehensive advice on investments.
“It is also possible that chatbots could help investment advisors — and not just their clients. AI will have a role to play within investment companies — in the automation of routine tasks. People will have more time to focus on activities that really add value.”
Regardless of the success (or lack thereof) of the Savings and Investment Union project, the relative prospects of active and passive investment and the impact of AI, several different forces will likely have an impact on the competitive landscape of Europe’s asset management industry.
Ahmed emphasises that pressures on prices and margins across financial services have been downwards over the last 25 years. This has been true in almost all markets globally, not just in Europe. “EU officials are, in general, keen for there to be further consolidation of fragmented markets for asset management and other services. However, national governments will still prefer local champions. Note the discussions over the proposed merger between Commerzbank and Unicredit, for instance.”
Lamesch suggests that rising demand for new product types will generate opportunities for companies that provide them and distribute them. “The new European Long-Term Investment Funds are rising in importance, thanks to growing demand from high-net-worth individuals and mass affluent investors.”
“One should also look out for the further development of private assets. Luxembourg is currently home to about €4.6 trillion in undertaking for collective investment in transferable securities funds and another €2.2 trillion in private assets funds that are focusing on private equity, venture capital, private debt, and real estate.”
In short, 2025 should be a good year for the providers and distributors of managed investments in Europe. For a long time, the asset management industry has seen the huge amount of household wealth that is sitting in bank deposits as a crock of gold that is tantalisingly close but frustratingly out of reach. This could well be the year in which — to continue the metaphor — the asset managers actually grasp the gold. This should be the case virtually regardless of what happens to global economies and markets.
As noted, there is a greater sense of urgency among decision-makers at the EC and in national governments to promote investments as opposed to savings. This is perhaps the biggest difference between now and a year ago. However, initiatives from the asset managers and fund distributors are also important. New and attractive products are being developed.
The costs of these products are, in the main, moving downwards — or in favour of the ultimate investor. Dealmaking will likely drive further consolidation — and possibilities for economies of scale. AI will likely also have a positive, if marginal, impact.
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