Troubles come to managers of traditional investment funds: their costs increase with rapidly declining profits and push their performance in the red.
These traditional fund managers compete with the providers of cheap tracker funds or exchange traded funds (ETFs), which simulate the performance of shares and also funds against a few basis points. The costs of the traditional funds are on average considerably higher.
A comparison of three hundred of these traditional funds by consultant McKinsey shows that the profits of specifically European fund houses declined by 2.4% in total last year, compared to last year. That is the strongest fall since 2011.
Asia is a big exception
Together they booked € 18 billion in profit. At the same time, Western funds invested € 1.8 trillion in new cash in funds. For American classic fund houses, the problem is at least as big: the profits fell by 3.3% to € 38 billion in total.
In Asia, however, it is a completely different story: there they earned 6.3% more, up to € 29 billion from last year. In a period with low interest rates and a lot of support from good corporate profits, the market of fund houses could have reformed. But he has largely failed to do so, according to Berenstein investment bank.