Over 50% of boutique asset managers have plans to expand internationally in the next 12 to 24 months, but 40% of those who have already taken the leap report struggles in attracting investors abroad, according to research from Universal Investment.
Europe was the most attractive market for those looking to expand, with 65% of managers expressing interest in the region. German and French speaking countries were marked as the key target market for 24% and 18% of boutiques, respectively. Luxembourg-domiciled funds were the most attractive vehicle to reach the market, appealing to 40% of investors.
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Marcus Kuntz, head of sales and fund distribution at Universal Investment, said: “European assets under management reached EUR 29 trillion in 2023, highlighting the region’s highly attractive growth potential, with 70% of managed assets coming from asset owners. Luxembourg and Ireland, now the largest global fund domiciles outside of the U.S., provide excellent access to the vast pool of institutional capital in Europe. We continue to see strong growth in both locations.”
While there is excitement around expanding internationally, over two thirds of asset managers also marked limited familiarity with the markets as a primary hurdle, including issues such as regulation. Currently, just 10% of those operating internationally said they have a “robust network” outside their home market, and 40% said they struggle to attract new investors in these areas.
The struggles have led over half towards a plan to use a third party with more familiarity for distribution . Another 63% have plans to use a third party for fund administration.
“Interestingly, managers tend to underestimate the costs of establishing their own operations in new markets and overestimate the expenses of partnering with a third-party provider,” Kuntz said.
