2010 was a good year for European investment funds. The investment fund industry bounced back to the asset levels reached at the onset of the global financial crisis. The recovery benefited all categories of long-term funds. This growth is remarkable in that it coincided with the euro area experiencing an exceptional crisis.

Asset growth and net sales in 2010:

• Strong increase in investment fund assets: Investment fund assets in Europe increased by 13.7% in 2010, from EUR 7,061 billion at end 2009 to EUR 8,025 billion at end 2010.
  

• Sustained demand for both UCITS and non-UCITS funds.UCITS registered net inflows of EUR 166 billion in 2010, compared to EUR 150 billion in 2009. This result was achieved despite outflows of EUR 126 billion from money market funds. Special funds reserved to institutional investors gathered a record EUR 149 billion in 2010, and real estate funds another EUR 5 billion. Overall, total net sales of UCITS and non-UCITS reached EUR 335 billion in 2010, compared to EUR 190 billion in 2009.
  

• Strong shift towards long-term UCITS:Total net sales of long-term UCITS (UCITS excluding money market funds) reached EUR 292 billion in 2010, compared to about EUR 195 billion in 2009.
  

Key developments in 2010:

• A buoyant cross-border fund business over the course of the year: UCITS domiciled in Luxembourg and Ireland recorded total net sales of EUR 215 billion in 2010. Luxembourg and Ireland’s market share in the UCITS industry increased to 44.1%.
  

• Wide range of fund choice: The wide range of funds following different types of investment strategies offered investors opportunities to shift their portfolio between fund categories according to changes in the global economic outlook and the perceived investment risks. For example, the sustained sovereign debt crisis in the euro area led to outflows from bond funds in December, whereas equity funds benefited from the encouraging economic outlook for 2011.
  

• Difficult time for money market funds: Due to very low short-term interest rates, competition from banks seeking to strengthen their balance sheets by increasing the share of the deposits and encouraging economic outlook investors chose to shift assets away from money market funds.
  

• Strong growth over the last decade. The outstanding UCITS and non-UCITS assets stood at EUR 4,560 billion at end 2010. They reached EUR 8,200 billion at its peak at end June 2007 before the financial crisis started to unfold. The value of investment fund assets tumbled to almost EUR 6 trillion in early 2009, before recovering to EUR 8,025 billion at end 2010.
  

• The industry’s crucial contribution to the European economy. Total investment fund assets represented 66 percent of the European Union’s GDP at end of 2010. This confirms the important contribution of investment funds to the European economy, as financial vehicles raising capital from retail and institutional investors, and providing funding to other sectors. These include monetary financial institutions, non-financial corporations and government agencies.