The asset management sector in Europe would change entirely if more savers recognised this data

by | 16, Feb 2019

The direction of all economic affairs is in the market society a task of the entrepreneurs. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain’s orders. The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. – Ludwig Von Mises.

Nobody in their right mind would pay a financial entity to manage their wealth if they knew they were going to be charged annual fees close to 2% for a service that they could get for lower than 0.5%.This practice still occurs because many savers/investors are still not aware of this disparity.

The biggest problem we see is that of information asymmetry: large entities know that most of their clients do not have the financial knowledge or background and so offer them mutual funds with high charges that do not add value. They underestimate the learning capacity of people across Europe as the basic concepts are very easy to comprehend.

At Vadevalor, we will work to ensure that savers/investors are better informed. This will ensure that big entities are forced to meet their clients’ needs either by offering funds that genuinely aim to outperform their benchmarks or by lowering their charges to levels that are similar to those of most efficient entities specialised in passive investing.

We only see two valid options in the market: low cost passive funds or active funds managed by professionals who are doing their best to add value for their clients. The asset management sector is slowly changing from the previous model in which most savers trusted the advisors of just one entity (thanks to the lack of transparency many entities in Europe have been able to charge high without offering high value products) to a new model in which savers are able to see all those professionals who have obtained good results (Vadevalor stamp) investing in any geographical area or sector. People will be able to choose passive funds of those geographical areas or funds led by fund managers who have been awarded the Vadevalor stamp.

Why is a period of change in the asset management sector so necessary?

As mentioned above, the problem we see in the sector is the great difference of information between financial entities which issue investment vehicles and savers. Most of the money does not reach those professionals who have achieved the best long-term results and intend to add value, but those entities with the strongest distribution channels and benefit from the lack of financial education of a big share of the population. Due to this disparity, most European families have not obtained good results from their investments.

  1. According to a research paper called “Active Fund Management: International Evidence”, around 30% of all equity funds in Europe are sold as active funds but, in reality, replicate benchmark returns and charge close to 2% when they should be charging minimal as they are not truly active.
  2. Looking at the ranking of commercialisation of investment funds by financial groups across Europe, it can be clearly seen how in most countries several big financial entities have a very big market share, although they have not obtained good long-term results for their clients as we will see below

We can differentiate between three types of investment funds:

  1. Type 1 – Passive investment funds, which adjust the percentages they buy from each company automatically to replicate the benchmark index, assigning a percentage to each share based on their capitalization with respect to the total market capitalization. For example, a passive fund replicating the MSCI Europe index would have 3.43% of Nestle, 2.43% of Roche, 2.17% of Novartis, 1.69% of HSBC etc. They do not require analytical efforts so these funds have very low costs.
  2. Type 2 – Truly active investment funds, which seek to obtain returns higher than those of the benchmarks, analysing companies in depth and investing only in those securities that fund managers consider undervalued.
  3. Type 3 – Funds that are sold as active investment funds with high charges but, in reality, replicate the benchmark. These are like the funds described in Type 1 but charging annual fees as if they were Type 2. This is the part of the market that should no longer exist.

As an example, imagine an investor who, 15 years ago, decided to invest €10,000 in an equity fund focused on global firms. That individual is very happy because the fund has achieved an annual return of 6% to a total of €24,000.

Let’s say that the same individual does not know which companies the fund is investing in or the charges paid, but in reality, the fund is a passive fund charging a fee of 2%.

The annual return achieved by the MSCI World over the same period was 8%, so a passive fund which charges a fee of 0.3% would have yielded more than €30,000, instead of €24,000, with the same risk.

Investors who want exposure to equities should only invest in Type 1 or Type 2 funds. With a passive fund, they will get benchmark returns and with a truly active fund they will have the possibility of achieving above benchmark returns if fund managers are right more times than wrong.

For instance, if an investor wants exposure to a fund investing in global equities, he could invest either in a passive fund of the MSCI World or in a fund managed by a professional who has been awarded the Vadevalor stamp for his outstanding long-term results, outperforming the global benchmark*.

*For example, Dev Chakrabarti and Mark Phelps of Alliance Bernstein, Steve Berexa of Allianz, Ben Fitchew and Jeremy Lang of Ardevora, Peter Saacke of Artemis, Tom Slater, James Anderson, Mark Urquhart, Iain McCombie, Charles Plowden, Malcolm MacColl, Spencer Adair and Stephen Paice of Baillie Gifford,Raphael Pitoun of CQS New City, Jeff Li of EFG New Capital, Gerrit Smith of Stonehage Fleming, Jeremy Podger of Fidelity, Terry Smith of Fundsmith, Andrew Green of GAM, Tom Hancock of GMO, Geir Lode, Lewis Grant and Louise Dudley of Hermes, Stephen Anness of Invesco, Michael Lindsell and James Bullock of Lindsell Train, Robin Geffen of Lionstrust, Ian Heslop, Amadeo Alentorn and Mike Servant of Merian, James Thomson of Rathbones, David J. Eiswert of T Rowe, Andrew Headley and Charles Richardson of Veritas or Daniel Pozen of Wellington.

We would apply a similar reasoning to any investor who wants to invest in funds focused on any region or sector. As an example, investors who want to buy an equity fund focused on Chinese equities would buy either a passive fund or a fund managed by a professional who is doing their best to achieve good results (Vadevalor stamp) investing in Chinese shares.


According to Inverco, the Association of Collective Investment Institutions and Pension Funds in Spain – Caixabank, BBVA, Santander, Bankia and Sabadell have a market share of 40.6% (€242,065M marketed by these five entities on a total amount marketed in Spain of €596,342M), as of June of 2019.

A year ago, we published an article showing the results of all funds of these 5 entities with a track record of at least 10 years, from June 2008 to June 2018:

Out of the 11 equity funds focused on Spain – excluding small cap funds as they have a different benchmark – two funds have achieved results very similar to the main Spanish benchmark and nine performed worse than the IGBMT (Índice General de la Bolsa de Madrid with dividends). Average annual return of 1.1% vs 3% of the IGBMT.

€10,000 growing at a 1% rate over 10 years becomes €11,046 and at a 3% rate €13.439

*Caixabank bolsa all caps, Caixabank bolsa gestión España, Caixabank bolsa España 150, BBVA Bolsa Plus, BBVA Bolsa, Santander acciones españolas, Bankia Bolsa Española, Bankia Dividendo España, Bankia Banca Privada RV España, Sabadell España Dividendo, Sabadell España Bolsa

Out of all their equity funds focused on Europe, not a single one outperformed its benchmark. The fund with the highest return achieved an annual return of 3.7%. Average annual return: 2.3% vs 5.5% achieved by the MSCI Europe index with dividends.

* Caixabank bolsa gestión Europa, Caixabank bolsa selección Europa, Caixabank bolsa dividendo Europa, BBVA bolsa Europa, BBVA bolsa dividendo, Santander solida div. Europa, Santander acciones Euro, Bankia dividendo Europa, Bankia euro top ideas, Sabadell Europa Bolsa base, Sabadell Europa valor base, Sabadell Euroacción base

Long term results of balanced funds and fixed-income funds are even worse. Average returns of the Long term results of balanced funds and fixed-income funds are even worse. Average returns of the of those 5 entities with a track-record of 10 years equalled 2.1% ,over a period in which the main benchmarks of fixed-income securities increased in value by at least 3.7%. The MSCI Europe with dividends increased at an annual rate of 5.5% and the MSCI World with dividends at an annual rate of 9.5%. Similarly, the average returns of fixed-income funds of these 5 big institutions with more than 10 years of track-record was a poor 1.9%.

* Caixabank crecimiento, microbank fondo ético, BBVA Gestión decidida, BBVA Gestión moderada, Santander Tandem 20-60, Santander PB Cartera Moderada, Bankia mx rv 75-universal, Bankia mx rv 50-universal, Bankia Fonduxo cl univers., Bankia soy así flexible, Sabadell Renta Variable mixta España


In Portugal, according to the APFIPP, Caixa Gestao, BPI, IM Gestao and Santander have a market share of 90% of all assets invested in mutual funds – only considering local entities. In Portugal, local entities have a market share of around 50%.

Out of their 20 equity funds of BPI, IM Gestao and Caixa Gestao, with a track record of more than 5 years, only two funds outperformed their benchmark since inception.

*BPI Ações Mundiais, BPI Africa, BPI America, BPI Asia Pacifico, BPI Euro Grandes Capitalizaçoes, BPI Europa, BPI Iberia, BPI Portugal, IMGA Açoes America, IMGA Açoes Portugal, IMGA Eurofinanceiras, IMGA European Equities, IMGA Global Equities Selection, IMGA Mercados Emergentes, Caixa Açoes EUA, Caixa Açoes Europa Socialmente Responsável, Caixagest Acções Emergentes, Caixa Ações Oriente, Caixgest Acçoes Japao, Caixagest Europa, Caixagest Portugal, Caixagest Ações Líderes Globais.


In Italy, according to the Italian Fund Hub, 5 entities have a market share of around 50% (Generali, Fideuram, Eurizon, Anima and Mediolanum).

Out of their 88 funds with a track record of more than 5 years, only 5 funds have outperformed their benchmarks, not by a wide margin, 3 of them focused on Italian equities.

*GIS Central & Eastern European Equity, GIS Euro Equity, GIS Euro Future Leaders, GIS European Equity Recovery, GIS Global Equity, IS SRI Ageing Population, GIS SRI European Equity, Alto America Azionario, Alto Internazionale Azionario, Alto Pacifico Azionario, Fonditalia Equity Brazil, Fonditalia Equity China, Fonditalia Equity Europe, Fonditalia Equity Global Emerging Markets, Fonditalia Equity India, Fonditalia Equity Italia, Fonditalia Equity Japan, Fonditalia Equity Pacific ex Japan, Fonditalia Equity USA Blue Chips, Fonditalia Equity Global High Dividend, Fonditalia Euro Cyclicals, Fonditalia Euro Equity Defensive, Fonditalia Euro FInancials, Fideuram Italia, Fideuram Master Selection Equity Asia, Fideuram Master Selection Equity Europe, Fideuram Master Selecion Equty Global Emerging Markets, Fideuram Master Seletion Equity Global Emerging Markets, Fideuram Master Selection Equity New World, Fideuram Master Selection Equity USA, Fideuram Master Selection Equity Global Resources, Eurizon Azionario Internazionale Etico, Eurizon Azioni America, Eurizon Azioni Area Euro, Euriozon Azioni Energia e Materie Prime, Eurizon Azioni Europa, Eurizon Azioni Inernazionali, Eurizon Azioni Italia, Eurizon Azioni Paesi Emergenti, Eurizon Fund c. to Equity China Smart Volatility, Eurizon Fund c. to Equity Emerging Markets New Frontiers, Eurizon Fund c. to Equity Emerging Markets Smart Volatility, Eurizon Fund c. to Equity Italy Smart Volatility, Eurizon Fund c. to Equity Small Mid Cap Europe, Eurizon Fund c. to Equity World Smart Volatility, Mediolanum BB Dynamic International Value Opportunity, Mediolanum Challenge Counter Cyclical Equity Fund Unhedged, Mediolanum Challenge Cyclical Equity Fund Unhedged, Mediolanum Challenge Emerging Markets Equity Fund, Mediolanum Challenge Energy Equity Fund Unhedged, Mediolanum Challenge European Equity Fund Unhedged, Mediolanum Challenge Germany Equity FUnd Unhedged, Mediolanum Challenge International Equity, Mediolanum Challenge Italian Equity Fund Unhedged, Mediolanum Challenge North American Equity Fund Unhedged, Medilanum Challenge Pacific Equity Fund Unhedged, Mediolanum Challenge Spain Equity Fund Unhedged, Mediolanum Challenge Technology Equity Fund Unhedged, Gamax Funds Asia Pacific, Gamax Funds Junior, Anima America, Anima Europa, Anima Funds plc c. to anima Asia/Pacific Equity, Anima Funds plc c. to Anima Emerging Markets Equity, Anima Funds plc c. to Anima Europe Equity, Anima Funds plc c. to anima Global Equity, Anima Funds plc c. to Anima U.S. Equity, Anima GEO America, Anima GEO Asia, Anima GEO Europa PMI, Anima GEO Italia, Anima GEO Paesi Emergenti, Anima Iniziativa Europa, Anima Italia, Anima Pacifico, Anima Selzione Europa, Anima Selezione Globale.


In Holland, we see a similar case. As an example, an asset management company like NN Investment Partners (ING) has more than 3 times the assets compared to a company like Kempen, which has achieved very good long-term results. Everyone is familiar with ING Bank. Out of their 60 equity funds listed on their website with more than a 5 year of track-record, none of their funds have outperformed their relevant benchmarks since inception.

*ING Direct Mattone Arancio, ING Top Italia Arancio, NN (B) Invest Belgium, NN (L) Asia Income, NN (L) Asia Income, NN (L) Banking & Insurance, NN (L) Banking & Insurance, NN (L) Climate & Environment, NN (L) Euro Equity, NN (L) Emerging Europe Equity, NN (L) Emerging Markets High Dividend, NN (L) Energy, NN (L) Emerging Markets High Dividend, NN (L) Energy, NN (L) Euro High Dividend, NN (L) Euro Income, NN (L) European Equity, NN (L) European High Dividend, NN (L) European Participation Equity, NN (L) European Sustainable Equity, NN (L) Food & Beverages, NN (L) Global Equity Impact Opportunities, NN (L) Global High Dividend, NN (L) Global Real Estate, NN (L) Global Sustainable Equity, NN (L) Greater China Equity, NN (L) Health & Well-being, NN (L) Health Care. NN (L) International Central European Equity, NN (L) International Romanian Equity, NN (L) Japan Equity, NN (L) Smart Connectivity, NN (L) US Enhanced Core Concentrated Equity, NN (L) US Growth Equity, NN (L) US High Dividend, NN Basic Materials Fund, NN Communication Services Fund, NN Daily Consumer Goods Fund, NN Dutch Fund, NN Duurzaam Alandelen Fonds, NN Europe Fund, NN Europe Small Caps, NN Europees Deelnemingen Fonds, NN Financials Fund, NN Global Fund, NN Global Real Estate Fund, NN Global Sustainable Opportunities Fund, NN Health Care Fund, NN Hoog Dividend Aandelen Fonds, NN Industrials Fund, NN Industrials Fund, NN Information Technology Fund, NN Japan Fund, NN Luxury Consumer Goods Fund, NN North America Fund, NN Opkomende Markten Fonds, NN Premium Dividend Fund, NN Premium Dividend Fund, NN Utilities Fund, WINNING FUNDS Full Equity.


In Austria, Erste and Raiffeisen have a market share of around 70%, only considering local entities… Out of their 53 equity funds listed on their websites, with a track-record of more than 5 years, only two of them have outperformed their benchmarks since inception.

*Erste Best of America, Erste Best of Europe, Erste Best of World, Erste Equity Research, Erste Responsible Stock America, Erste Responsible Stock Europe, Erste Responsible Stock Global, Erste Stock Asia Infrastructure, Erste Stock Asia Pacific Property, Erste Stock Biotech, Erste Stock Commodities, Erste Stock EM Global, Erste Stock Europe, Erste Stock Europe Emerging, Erste Stock Europe Property, Erste Real Estate, Erste Stock Global , Erste Stock Istanbul, Erste Stock Japan, Erste Stock Russia, Erste STock Techno, Erste Stock Vienna, Erste WWF Stock Environment, PIZ Buin Global, Premium Asset Invest, Pro Invest Aktiv, RT Österreich Aktienfonds, RT OsteuropaAktienfonds, RT VIF Versicherung International Fonds, RT Zukunfsvorsorge Aktienfonds, TopStrategie Aktiv, TOP-Fonds II “Der Aktive” der Steirmärkischen Sparkasse, TOP-Fonds V “Der Offensive” der Steiermärkischen Sparkasse, Raiffeisen Active Aktien, Raiffeisen Emerging Markets, Raiffeisen Energie Aktien, RaiffeisenEurasien Aktien, Raiffeisen Europa Aktien, Raiffeisen Europa SmallCap, Raiffeisen GlobalAktien, Raiffeisen Healthcare Aktien, Raiffeisen Infrastruktur Aktien, Raiffeisen MegaTrendsAktien, Raiffeisen Nachhaltigkeit Aktien, Raiffeisen Nachhaltigkeit, Raiffeisen Nachhaltigkeit Momentum, Raiffeisen Ósterreich Aktien, Raiffeisen Osteuropa Aktien, Raiffeisen PAXetBONUM Aktien, Raiffeisen Pazifik Aktien, Raiffeisen Russland Aktien, Raiffeisen TopDividende Aktien, Raiffeisen US Aktien.


Other markets

In France, the market is more developed but fund managers with the best log-term results are not the ones managing the largest funds… Independent companies have a market share of only around 10%.

In the Nordic region, big banks also have a large market share. In most case, not because of their historical results.

The United Kingdom has the most developed market in Europe but, on many occasions, those professionals who have achieved the best long-term results are not the ones who are gaining new business.



If an entity offers hundreds of funds where almost all them underperform their benchmarks and charges high, they are engaging in bad practices. There is no other explanation. We only see two valid options in the market. Progressively, as transparency increases, clients will demand either truly active funds or passive funds. Many big institutions are going to be forced to change their business model in the asset management sector to meet their clients’ needs. We encourage everyone to look out for the Vadevalor Stamp of approval to avoid funds that do not add value and ensure that money flows to the best professionals in the industry.



Vadevalor is a global independent research firm. Our aim is to help investors make better investment decisions.