Luxembourg-domiciled funds made up almost a third of Europe's mutual fund industry in the quarter to the end of June, a period of high activity with regards to the clean-up of product ranges, according to research.

Luxembourg hosted the highest number of mutual funds in Europe during the second quarter of 2015, according to a new report by Lipper.

As of the end of June, there were 32,044 mutual funds registered for sale in Europe; the Grand Duchy dominated the market, hosting 9,061 funds, followed by France, where 4,670 funds were domiciled.

Although the European fund industry attracted net inflows of around €67.2 billion ($75.6 billion) during the first half of the year, there appeared to be continued consolidation of product ranges, with 688 funds (359 liquidations and 329 mergers) withdrawn from the market and only 459 new products launched. Indeed, the quantity of newly launched products had shrunk 11 per cent from the second quarter of last year, while the number of fund mergers went up by around 28 per cent.

“It seems European fund promoters are in a standby mode, even though the activity regarding fund closures, mergers, and launches went up in Q2 2015 compared to Q1 2015. One reason for this can be seen in the still exceptional high net inflows witnessed by the European fund industry during Q2 2015; higher assets under management lead to a higher income stream and therefore to lower pressure with regard to the profitability of single funds within the product ranges,” said Lipper.

Equity funds took the largest slice of the region's mutual fund pie at the end of June, with 37 per cent of the funds available for sale, followed by mixed-asset funds (26 per cent), bond funds (22 per cent), and money market funds, representing 4 per cent of the market. Of the 155 equity funds launched over the three-month period, 67 were launched in Luxembourg, 22 in France and 19 in the UK.

“It is remarkable that the industry has not started to launch a massive number of new products to profit from the ongoing trend toward asset allocation/multi-asset and income products as has been seen in the past. Nevertheless, the European fund industry still has a lot of room for consolidation, since the AuM in Europe is still far behind the average AuM in the US.”