“Most comparisons with the number of US mutual funds are misleading because they do not compare like with like. Unlike US mutual funds, Ucits can be distributed domestically, across the EU or internationally,” explained Bernard Delbecque, senior director of economics and research at the European Fund and Asset Management Association, in a press statement last week. Photo: Efama

“Most comparisons with the number of US mutual funds are misleading because they do not compare like with like. Unlike US mutual funds, Ucits can be distributed domestically, across the EU or internationally,” explained Bernard Delbecque, senior director of economics and research at the European Fund and Asset Management Association, in a press statement last week. Photo: Efama

Reducing the number of Ucits in Europe will not significantly lower costs, as even in a best-case scenario, average fund size would remain far smaller than in the US, argued European Fund and Asset Management Association, urging policymakers to focus on expanding Ucits assets instead.

Fostering the growth of undertakings for collective investment in transferable securities (Ucits) assets, rather than focusing on fund consolidation, would be a more effective strategy for reducing the cost of investment funds and strengthening EU capital markets. This was the key of the European Fund and Asset Management Association (Efama) in a press statement on Thursday 20 February 2025, following the release of the 20th issue of its Market Insights series, titled ‘Beyond fund consolidation: a more promising strategy for bigger funds and faster cost declines in Europe.’

The report analysed the size and number of equity Ucits in Europe compared to US equity mutual funds and questioned the assumption that fund consolidation would lead to significant cost reductions. It found that in 2023, Europe had 10,281 equity Ucits, more than double the number of US equity mutual funds. Efama attributed this to the international distribution of Ucits, which requires a more diverse range of funds tailored to local markets, whereas US mutual funds are predominantly sold domestically.

The study also highlighted the considerable size disparity between European and US funds. The average equity Ucits had assets of €501m, while the average US equity fund stood at $3.5bn (€3.1bn). Efama identified several barriers to large-scale fund consolidation in Europe, including differences in tax treatment, regulatory divergence, local distribution agreements and language constraints. Even if the number of equity Ucits in Europe were reduced to US levels, Efama estimated that the average fund size would only increase to €962m, still far below the US average of €3.1bn.

Bernard Delbecque, senior director of economics and research at Efama, stated in the report that direct comparisons between Ucits and US mutual funds were misleading, as the two systems operated under different market conditions. He noted that the larger pension savings market in the US played a key role in supporting bigger funds, while European investors remained overly reliant on ‘pay-as-you-go’ first-pillar pensions. He stressed that encouraging more occupational and private pension savings in Europe would be essential to increasing the size of Ucits and reducing costs.

Efama’s director general, Tanguy van de Werve, also weighed in on the findings, arguing that boosting investment levels would be a far more effective way to strengthen EU capital markets than promoting fund consolidation. He expressed hope that the upcoming European Savings and Investments Union would prioritise structural issues such as pensions, tax incentives and financial literacy to support long-term fund growth.

The full report is available .

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