The European Fund Industry: Responses to the Crisis

The European Fund Industry: Responses to the crisis September 2010 Introduction The impact of the late monetary crisis on the asset management industry has been peculiarly violent: in one hand, the decline of the value itself of its products bring down profits; in the other one, the loss of trust of the customers who were massively switching their assets to other products. The sub prime crisis that started in middle summer 2007 led to awful market turmoil and severe consequences for the asset management industry. A new peak was reached in September 2008 when Lehman Brothers declared bankruptcy. All the stock markets crashed and almost altogether the large banks were left with portfolios of worthless securities. Late 2008 saw the European fund industry being seriously shaken by a huge fraud scandal in the US, the Madoff purpose mining one of the pillars for investor protection in the UCITS[1] regulatory modelling: the custodian role. During the last two decades investment funds deport been increasing at a rapid pace, sustaining high in a higher place returns. This development stopped suddenly with the beginning of the financial crisis.

The position impact of the crisis for the European Fund industry can be summarizing by the following figures[2]: Total investment fund assets put down by 23% in 2008 (or € 1799bn) UCITS complete take in outflows of € 344bn or 6% of UCITS assets at the end of 2007 Asset decline: wholly 19% due to outflows and 81% to market losses 40% of the total outflows in 2008 were recorded in October when the financial world was on the edge of collapse From a sales viewpoint the year 2008 has been defined the annus horribilis for the fund industry: four consecutive quarters of net flows rec rewrite by UCITS following the outbreak of the global financial crisis during the summer of 2007.The first signs of recovery are reported in 2009 where the total net assets rose by 15% or € 924bn. [pic] Source: EFAMA statistics... If you want to get a full essay, order it on our website: Ordercustompaper.com

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