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1 THOMSON REUTERS LIPPER EUROPEAN FUND INDUSTRY REVIEW H Please attribute the content to Detlef Glow, Head of EMEA Research at Thomson Reuters Lipper and the author of this report.

2 EXECUTIVE SUMMARY 2017 New Records Ahead for the European Fund Industry? The assets under management in the European fund industry increased from 9.4 tr to 10.0 tr over the course of first half Bond funds ( bn) were the best selling asset type for 2017 to date. Within the segment of long-term mutual funds Bond Global ( bn) was the best selling sector, followed by Equity Global ( bn) and Bond Emerging Markets Global in Hard Currencies ( bn). BlackRock ( bn) was by far the largest fund promoter in Europe, followed by Amundi ( bn) and JP Morgan ( bn). BlackRock, with net sales of 43.8 bn, was the best selling fund promoter for first half 2017 overall, well ahead of PIMCO ( bn) and Amundi ( bn). The European fund market increased by 54 funds over the course of 2017 to date. Mixed-asset funds showed the highest number of mergers (119) and launches (421), while equity funds showed the highest number of fund liquidations (198).

3 EUROPEAN FUND INDUSTRY REVIEW H Looking at the headline figures, first half 2017 set the stage for a new record year in the European fund industry. The assets under management in Europe stood at 10.0 tr at the end of June, close to the record level shown earlier in the year. In addition, the European fund industry enjoyed net inflows of bn over the course of first half Assets Under Management in the European Fund Industry The assets under management in the European fund industry increased from 9.4 tr to 10.0 tr over the course of first half This increase was mainly driven by net inflows ( bn), while market performance contributed bn. Since ETFs have become an important part of the European fund industry, it is essential to review that market segment separately to get a better picture of the underlying trends in the market, although the numbers for ETFs are included in the overall numbers for the European fund industry. The European ETF industry enjoyed further increasing popularity with all kinds of investors over the course of first half This popularity was seen in the development of the assets under management; assets held by the European ETF industry increased and stood at bn at the end of June 2017, up from bn at the end of In line with their actively managed peers the growth within the European ETF segment was mainly driven by net sales ( bn), while the performance of the underlying markets contributed 13.2 bn. Graph 1: Assets Under Management in the European Fund Industry by Product Type (Euro Billions), June 30, 2017

4 With regard to the overall number of funds it was not surprising that equity funds ( 3.6 tr) were the asset type with the highest assets under management, followed by bond funds ( 2.5 tr), mixed-asset products ( 1.5 tr), money market funds ( 1.2 tr), alternative UCITS funds ( 0.6 tr), real estate funds ( 0.2 tr), and other products ( 0.2 tr) as well as commodity funds ( 0.03 tr). Graph 2: Market Share Assets Under Management by Asset Type, June 30, 2017

5 European Fund Flow Trends, H Generally speaking, the year 2017 seemed to be becoming a very successful year for the European fund industry; the net inflows as of June 30 stood at bn into mutual funds, close to the full-year record flows of bn marked for The number for first half 2017 was far above the long-term 12-month average of bn. With regard to these numbers, it was not surprising that first half 2017 was also a good period for the promoters of ETFs. Graph 3: Estimated Net Flows in the European Mutual Fund Industry (Euro Billions)

6 Fund Flows Into Long-Term Mutual Funds A more detailed view by asset type unveils that all asset types did well over the course of 2017 so far. With regard to the low-interest-rate environment, it was surprising that bond funds ( bn) were once again the best selling asset type, followed by mixed-asset funds ( bn), equity funds ( bn), alternative UCITS products ( bn), and real estate funds (+ 3.0 bn) as well as other funds (+ 2.9 bn) and commodity funds (- 2.6 bn). These fund flows added up to overall net inflows of bn into long-term investment funds for first half Graph 4: Estimated Net Sales by Asset Type, 2017 Year to Date (Euro Billions) Fund Flows into Money Market Products Money market products ( bn) were the third best selling asset type overall for first half Mutual funds investing in money market instruments enjoyed net inflows of 23.3 bn, while their passive peers (ETFs) enjoyed net inflows of 3.5 bn. This flow pattern led the overall fund flows to mutual funds in Europe to net inflows of bn for first half Money Market Products by Sector Money Market GBP ( bn), followed by Money Market EUR (+ 5.5 bn) and Money Market USD (+ 1.7 bn) were the three best selling money market sectors for the year 2017 to date. At the other end of the spectrum Money Market Global (- 1.4 bn) suffered the highest net outflows in the money market segment, bettered by Money Market EUR Leveraged (- 0.8 bn) and Money Market HUF (- 0.6 bn).

7 Assets Under Management by Fund Domiciles With regard to the assets under management by fund domicile, it was not surprising that Luxembourg ( 3,360.7 bn) and Ireland ( 1,613.0 bn) were at the top of the table, since these two domiciles are the international fund hubs for Europe; the funds domiciled in these countries are normally used for distribution in several other EU member states under the common UCITS regime. The next fund domiciles were the United Kingdom ( 1,434.0 bn), France ( bn), and Switzerland ( bn). Graph 5: Assets Under Management in Europe by Fund Domicile, June 30, 2017 (Euro Billions) That said, a closer view of the assets under management by fund market unveils that Luxembourg and Ireland were not as important as it appeared from the assets under management by fund domicile chart. In other words, even though there were a number of funds domiciled in the international fund hubs, they were managed and distributed in other countries. In this regard the view of the assets under management by fund market gives a better overview of the importance of the single markets in Europe. Graph 6: Assets Under Management in Europe by Fund Domicile vs. Fund Market, June 30, 2017 (Euro Billions)

8 The United Kingdom ( 2,075.4 bn) was the largest single fund market by assets under management (including money market products), followed by France ( 1,288.8 bn), Switzerland ( bn), Germany ( bn), and Italy ( bn). Even though this perspective is not perfect, it seems to reflect the real market structure in Europe much better than the view by fund domicile. Fund Flows by Fund Domiciles Single fund domicile flows (including those to money market products) showed in general a positive picture for June, with 24 of the 34 markets covered in this report showing net inflows and 10 showing net outflows. Luxembourg ( bn) was the fund domicile with the highest net inflows, followed by Ireland ( bn), France ( bn), the United Kingdom ( bn), and Germany ( bn).on the other side of the table Denmark was the single fund domicile with the highest net outflows ( bn), bettered by Jersey (- 0.8 bn) and Austria (- 0.5 bn). Graph 7: Estimated Net Sales by Fund Domiciles, 2017 Year to Date (Euro Billions) Within the bond sector, funds domiciled in Luxembourg ( bn) led the table for first half 2017, followed by those domiciled in Ireland ( bn), France ( bn), the United Kingdom ( bn), and Switzerland (+ 6.6 bn). Bond funds domiciled in Denmark (- 7.9 bn), Spain (- 3.3 bn), and Austria ( bn) stood at the other end of the table. For equity funds, products domiciled in Ireland ( bn) led the table for the year 2017 so far, followed by funds domiciled in Luxembourg ( bn), the United Kingdom ( bn), and France (+ 9.4 bn) as well as Spain (+ 3.2 bn). Meanwhile, Denmark (- 6.2 bn), Switzerland (- 3.3 bn), and Finland (- 0.8 bn) were the domiciles with the highest net outflows from equity funds.

9 With regard to mixed-asset products Luxembourg ( bn) was the domicile with the highest net inflows over the course of 2017 so far, followed by funds domiciled in Italy ( bn), the United Kingdom (+ 8.1 bn), Belgium (+ 5.1 bn), and Germany (+ 4.6 bn). On the other side of the table funds domiciled in the Netherlands showed the highest net outflows (- 1.2 bn), bettered by funds domiciled in Jersey (- 0.8 bn) and Poland (- 0.2 bn). Luxembourg ( bn) was the domicile with the highest net inflows into alternatives for first half 2017, followed by Ireland ( bn), the United Kingdom (+ 3.5 bn), and France (+ 2.8 bn) as well as Germany (+ 0.8 bn). Italy (- 6.5 bn), bettered by the Netherlands (- 0.6 bn) and Guernsey (- 0.1 bn), stood at the other end of the table. Assets Under Management by Lipper Global Classification Equity Global ( 16.7 bn) was the largest sector by assets under management within the Lipper Global Classifications at the end of June 2017, followed by Money Market EUR ( bn), Bond Global ( bn), and Equity US ( bn) as well as Equity Europe ( bn). Graph 8: The 20 Largest Lipper Global Classifications in Europe by Assets Under Management, June 30, 2017 (Euro Billions)

10 Fund Flows by Lipper Global Classification Within the segment of long-term mutual funds Bond Global ( bn) was the best selling sector, followed by Equity Global ( bn), Bond Emerging Markets Global in Hard Currencies ( bn), and Bond EUR Short Term ( bn) as well as Mixed Asset EUR Balanced-Global ( bn). Graph 9: The Ten Best and Worst Selling Sectors, 2017 Year to Date (Euro Billions) At the other end of the spectrum Equity US (- 7.4 bn) suffered the highest net outflows from long-term mutual funds, bettered by Bond EMU Government Short Term (- 4.9 bn) and Target Maturity Bond EUR (- 3.2 bn) as well as Bond EMU Government (- 3.1 bn) and Absolute Return EUR Medium (- 3.0 bn).

11 Assets Under Management by Promoters A closer look at the assets under management in the European mutual fund industry shows that BlackRock ( bn) was by far the largest fund promoter in Europe, followed by Amundi ( bn) and JP Morgan ( bn) as well as Deutsche Bank ( bn) and UBS ( bn). Looking at these numbers, one needs to take into account that JP Morgan is the only fund promoter of the leading five fund promoters in Europe that does not offer ETFs. Graph 10: The 20 Largest Promoters by Assets Under Management in Europe, June 30, 2017 (Euro Billions)

12 Fund Flows by Promoters BlackRock, with net sales of 43.8 bn, was the best selling fund promoter for first half 2017 overall, well ahead of PIMCO ( bn) and Amundi ( bn). Taking into account that the flows from BlackRock contain 16.7 bn from their ETF branch ishares means that the traditional mutual funds branch of the business saw net inflows of 27.1 bn. Since the flows into PIMCO products also contain flows into ETFs (+ 0.8 bn), BlackRock also maintained its position as the best selling promoter for mutual funds from this point of view. Graph 11: Twenty Best Selling Promoters, 2017 Year to Date (Euro Billions) Considering the single-asset bases, PIMCO ( bn) was the best selling promoter of bond funds for first half 2017, followed by BlackRock ( bn), UBS (+ 7.6 bn), and Eurizon Capital (+ 5.4 bn) as well as AB (+ 5.3 bn). Within the equity space BlackRock ( bn) stood at the head of the table, followed by Vanguard Group (+ 4.7 bn), Amundi (+ 4.1 bn), and Societe Generale (+ 3.8 bn) as well as Northern Trust (+ 3.6 bn). Eurizon Capital (+ 6.3 bn) was the leading promoter of mixed-asset funds in Europe for first half 2017, followed by Allianz (+ 5.2 bn), Amundi (+ 4.9 bn), and KBC (+ 4.4 bn) as well as Union Investment (+ 4.0 bn). GAM (+ 3.6 bn) was the leading promoter of alternatives funds for the year so far, followed by Deutsche Bank (+ 3.5 bn), Aviva (+ 3.0 bn), and Invesco (+ 2.6 bn) as well as Aqr Cap Management (+ 2.2 bn).

13 Promoter Activity Fund Launches, Liquidations, and Mergers After the high inflows into mutual funds over the course of the last three years, Q (+58) was the first quarter with a net growing number of funds in the European fund market since Q Since Q showed only a slight decrease in the number of funds (-4), the increase of the second quarter led to an overall increase for first half 2017 (+54). This could mean that the increasing flows into mutual funds might have made the European fund industry more confident in regard to future earnings, thereby leading to increased activity with regard to fund launches. That said, there were still a high number of small and therefore unprofitable funds in the European market, which might be subject to a merger or liquidation in the future. The number of these mergers and liquidations may be higher than the number of newly launched funds, which might lead to a decreasing number of funds in the future. Graph 12: Fund Launches, Liquidations, and Mergers, 1H-2017 European fund promoters liquidated 505 funds over the course of 2017 so far, while 468 funds were merged into other funds. In contrast, European fund promoters launched 1,027 funds, meaning the European fund market increased by 54 funds over first half 2017.

14 A more detailed view shows that mixed-asset funds showed the highest number of mergers (119) and launches (421), while equity funds showed the highest number of fund liquidations (198). With regard to the overall market trend of mixed-asset products, it was not surprising that this category showed the highest number of launches. It was also not surprising to see the high number of mergers in this category; fund promoters may try to merge old products into new funds because the new products may have wider investment objectives, making them more attractive to investors. Especially since the performance of many old mixed-asset products was heavily dependent on developments in the bond markets, it was not surprising that fund promoters liquidated or merged these products into their new product offerings; this helped to streamline the product ranges and generate assets under management for the successor funds. Graph 13: Fund Launches, Liquidations, and Mergers by Asset Type for 2017 Year to Date

15 For more information, please contact our Thomson Reuters Lipper Research Team: Detlef Glow Head of Lipper EMEA Research Phone: +49(69) Robert Jenkins Global Head of Research, Lipper Phone: +1 (617) Xav Feng Head of Lipper Asia Pacific Research Phone: Otto Christian Kober Global Head of Methodology, Lipper Phone: +41 (0) Jake Moeller Head of Lipper United Kingdom & Ireland Research Phone: +44(20) Tom Roseen Head of Research Services Phone: +1 (303) Media enquiries: Eddie Dunthorne Lipper U.S. Client Services customers.reuters.com/crmcontactus/support.asp Lipper Europe Client Services (UK) (Europe) customers.reuters.com/crmcontactus/support.asp Lipper Asia Client Services customers.reuters.com/crmcontactus/support.asp Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks and trademarks of Thomson Reuters and its affiliated companies.