Positive news surrounding the UK’s investment landscape has been particularly hard to come by in the years since Brexit, but we’ve come across some findings that will give our domestic readers a reason to cheer this morning.
In a rare and radical display of patriotism, Asset Allocator can today announce the multi-asset fund landscape in the UK is absolutely slam-dunking on its European counterpart. Cool Britannia is back, baby.
How so? Well, a recent study from Morningstar outlined how UK-domiciled multi-asset funds are significantly cheaper than those on the continent, while boasting stronger performance figures to boot.
They wrote:
The UK fund-of-funds market has experienced a consistently positive trajectory in flows, maintaining strong momentum through 2023 and 2024. In contrast, excluding the UK, the Europe market has faced significant challenges, with sharp outflows surpassing EUR €30bn since 2023.
And:
Fee reductions have been more pronounced in the UK fund-of-funds market, with average fees for key allocation categories falling to 0.86 per cent. This trend has been driven by more stringent regulatory oversight, heightened market competition, and greater fee sensitivity among UK investors and financial advisers.
The average cost for a European fund-of-funds strategy is a whopping 1.64 per cent, according to Morningstar. Eye-watering stuff. Not even the best active equity managers in the UK can get away with charging that much. Perhaps European asset managers are hoping their clients are distracted enjoying the long Mediterranean summer rather than checking the finer details of their KIIDs.
Not only are European multi-asset products expensive, it follows that expensive products also tend to suck. Morningstar also found that funds above 96 basis points have broadly underperformed their peer groups over a rolling three-year period.
1.64%
The average cost of a European fund-of-funds strategy, according to Morningstar data
There’s some other interesting nuggets in the report. Morningstar also revealed the most popular funds that constitute European multi-asset funds, with S&P 500 trackers leading the way.
The iShares S&P 500 ETF appears in 196 different funds at an average 8 per cent weighting, while the JPMorgan US Research Enhanced Active ETF appears in 145 at an average 6.3 per cent size.
Surprisingly, the Xtrackers S&P 500 Equal-Weight ETF appears in 132 portfolios, underscoring the rapid rise in popularity that this concentration-busting strategy has enjoyed over the course of 2024 and 2025.
Asset Allocator has been feeling very high-minded of late, having sifted through a number of useful industry surveys. We posed the following question to our readers recently: how cheap is too cheap?
The answer to that remains open, but Morningstar’s research now certainly points to issues of quality at the top end of the fee spectrum. You can read more on whether the death of the high cost fund is upon us, by following the adjacent link.
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