RETHINKING DISTRIBUTION

Figure 4

Net sales of European domiciled funds (EUR bn)

2

Increased exposure to emerging markets As GDP growth in emerging markets is expected to increase more rapidly than in OECD countries over the next decade, there will be a continued and inexorable shift of economic power fromOECD countries to SAAAME (South America, Africa, Asia, and Middle East). This will significantly impact the AM industry, both in terms of investment decisions and distribution strategies. PwC’s latest analysis anticipates that the GDP of the largest E7 emerging economies will overtake the current G7 economies by 2020, and Chinamay already have surpassed the US by the end of the decade [4] . Currently, China has a population of 1.3 billion and one of the highest savings rates in the world (53.6% in 2009). It will also have 12 million Chinese millionaire households by 2020 and its number of middle class urban households will have trebled [5] .

300

190.4

200

170.7

100.7

91.6

100

57.1

30.2

N.A.

0

2007

20 08

2009

2010

-100

-200

Investing in emerging markets Total

-300

-305

-400

N.A. No data available for net sales of emerging market funds in 2008

Source : Lipper datadigest

attractive fund distribution destinations

Asia is the second-largest market for UCITS products after Europe, accounting for 40% of net sales over the past three years [6] .While the penetration of European fundmanagers in the largest emergingmarkets remains low, significant opportunities may arise in the future. Asia accounts for 60%of the total world population but holds only 13% of AuM (see figure 5).

attractive investments

Driven by a low interest rate environment in Europe and a limited growth potential, investors appetite for emerging market products has grown. As an illustration of this, the net sales of emerging market funds increased by 76% in 2010 to reachmore than EUR 100bn, i.e. 59%of total net sales in Europe (see figure 4).

Figure 5

Amount of AuM compared to population (% of the world total)

70%

Population AuM

60%

60%

52%

50%

[4] PwC,TheWorld in2050-Theacceleratingshiftofglobaleconomicpower:challengesandopportunities [5] McKinsey Global Institute [6] PwC and FSC (Financial Services Council), Asia Region Fund Passport, The Future of the funds management industry in Asia, November 2010

40%

35%

30%

20%

13%

13%

10%

7%

0%

Asia

EU

Americas

Source : PwC

18