Why we need an EU perspective in the supervision of large asset managers

13 February 2026

By Ana Maria Ceh, Pierce Daly, Johanne Evrard, Michael Grill, Alessandra Martino, Michael Wedow and Christian Weistroffer

Europe’s asset management industry is booming. Over the past decade, assets under management have nearly doubled, now surpassing €20 trillion. The sector has grown around three times faster than the banking sector, which holds over €39 trillion in assets. Asset managers are also instrumental in achieving the objectives of the savings and investments union (SIU) by channelling savings towards productive investment opportunities across Europe.

As this blog post shows, the European investment fund sector is highly concentrated in a few countries and dominated by 10 to 15 key players that operate extensively across borders. Despite their systemic relevance and their cross-border reach, even the largest asset managers remain supervised at national level. As the sector is likely to have an even bigger footprint in the years to come, given the deepening of the SIU, the time is ripe for assessing whether the supervisory architecture is fit for purpose. A more consistent EU framework could level the playing field in the application of European rules and help remove barriers to cross-border fund distribution. This would enable larger scale and lower costs for retail investors. Establishing European oversight of the largest asset managers would be a crucial step towards safeguarding financial stability and supporting a stronger, more efficient capital market. It would also help the ECB in the conduct of its monetary policy and in its banking supervision tasks.

A Pan-European industry – still supervised nationally

What does the industry currently look like? How do European asset managers operate? Let’s zoom in.

Using the ECB’s securities holdings statistics to explore the sector, we find intense cross-border activity among investors, funds and assets. Chart 1 illustrates the flow of capital passing through European funds. At its core are investment funds domiciled in Ireland and Luxembourg which attract capital from a broad investor base across Europe (Chart 1, panel a).^[1] In fact, foreign investors account for around 90% of the investor base in Irish and Luxembourg funds.

This concentration gives these funds clear structural advantages in terms of efficiency and service specialisation. It also implies that distress in the investment fund sector in these hubs could have a disproportionate effect on financial stability in the EU.

In Chart 1 (panel b) we see that funds allocate their portfolios broadly across the EU and beyond. This shows the sector’s deep integration within the European financial system. This pan-European footprint also means that shocks can spill across borders quickly through run and contagion risk When many investors redeem their fund shares simultaneously, funds may be forced to sell assets quickly. And this could potentially amplify market turmoil. Stress can also spread through common exposures to assets, as many funds hold similar portfolios and respond similarly to shocks. In times of stress, this can lead to correlated sales, reinforcing price declines across markets. And this concern is more than just hypothetical: the market turmoil of March 2020 was a stark reminder of how a common shock can trigger and amplify stress across funds and across national borders. Ultimately, central banks may be called upon to stabilise markets in episodes of acute stress. Indeed, ECB research shows that central banks were instrumental in containing stress in the investment fund sector in March 2020.^[2] However, such interventions in times of crisis create moral hazard and may place public funds at risk. Regulatory safeguards, enforced through effective supervision, are therefore essential to protect against systemic risks.

The market turmoil of March 2020 also exposed a fundamental limitation of the current supervisory framework and offered an important lesson: risks do not stop at borders. Risks can materialise far from a fund’s home jurisdiction and beyond the effective reach of its national supervisor. This highlights two key shortcomings in the current set-up. First, national supervisors may be more likely to overlook potential spillover effects to other countries. Second, countries that could be affected by stress in the investment fund sector are often not responsible for supervising the relevant funds and therefore lack the ability to pre-empt emerging risks. Such nationally fragmented oversight leaves room for supervisory blind spots that could be addressed through integrated supervision. A more European supervisory framework would ultimately strengthen the sector’s resilience, helping to preserve credit and liquidity flows to the economy during periods of financial stress, thereby enhancing the effectiveness of monetary policy transmission and supporting overall economic stability.

Chart 1

Cross-border activity of funds domiciled in the euro area.

a) Investor location, by country	b) Asset location, by country
(market value of securities, EUR trillions)	(market value of securities, EUR trillions)

Indicators can guide policymakers

Size, concentration, cross-border activity and interconnectedness are generally considered key indicators of systemic relevance. Applying these criteria suggests that a small number of asset management groups (around 10 to 15) rank high across these dimensions, together accounting for a substantial share of the European investment fund sector.

• Size: The largest 10 to 15 asset management groups dominate the European landscape (Chart 2) with around €6.3 trillion in assets under management (over half of the total assets of euro area funds).^[3] By comparison, the 15 largest banks under direct ECB supervision hold around €8 trillion in assets, which is less than one-third of total euro area banking assets. The investment fund sector is therefore considerably more concentrated than the banking sector.
• Cross-border activity: These 10 to 15 asset management groups operate extensively across borders (Chart 2). Luxembourg and Ireland host most of the funds managed by these groups, serving as key hubs connecting investors and markets across the EU.
• Interconnectedness: These asset management groups are closely connected to banks or insurance companies. Bank-owned groups dominate in terms of assets and are primarily EU-based, whereas most independent asset managers are headquartered in the United States. Ownership links create potential reputational spillovers, as banks with affiliated asset managers may face market pressures or even an erosion of trust if they experience large redemptions or losses. Previous analysis also shows that investment funds provide a non-negligible share of funding to banks.^[4] Hence, issues in the investment fund sector could have a knock-on effect in the banking sector, making them particularly relevant for the ECB as a banking supervisor.

Chart 2

Top 15 asset management groups with investment funds in the euro area

Asset management groups, by fund manager domicile(total net assets, EUR billions)

A feasible approach to organising the supervision of asset management groups

Systemic actors require systemic oversight. This is why the European System of Central Banks (ESCB) sees merit in a more integrated supervision of asset managers and funds with significant European cross-border activities.^[5] This could be achieved, for example, by giving the European Securities and Markets Authority (ESMA) the task of coordinating supervisory colleges for these entities, bringing together relevant national supervisors to promote a European approach in their supervision. Such supervisory colleges already exist for some asset managers under a voluntary set-up to exchange information and practices.

Focusing on the 10 to 15 largest entities would cover the systemic core of the European asset management industry while preserving the current national framework for smaller, mainly domestic actors. Each supervisory college would include only the authorities of countries where a group’s asset managers are located (Chart 2). This targeted composition would keep the structure manageable and ensure operational feasibility. Given ownership links and shared exposures, the supervisory colleges should also coordinate closely with the relevant banking and insurance supervisors to capture cross-sectoral risks and ensure consistent oversight.

However, this approach alone would not capture all potential risks to financial stability. Beyond the supervision of key players, the key issue remains collective behaviour that can amplify market stress. This holds true regardless of their individual size or cross-border reach. Such behaviour can generate systemic effects, even when no single fund is large enough to warrant EU-level oversight. Addressing these broader collective risks requires a sufficiently developed macroprudential toolkit embedded in a more integrated supervisory approach to non-banks in the EU.^[6] Together, these measures would complement EU-level oversight of the most systemic actors while contributing to the SIU objective of financing the real economy.

A more integrated supervisory framework supports Europe’s ambitious goals

The EU is moving closer towards its ambition of building a deeper, more integrated capital market, especially in light of the Savings and Investments Union strategy.^[7] Against this backdrop, it is time to examine how the current supervisory framework aligns with the landscape of the European asset management sector, with the Commission’s latest proposals being particularly welcome in this regard.^[8]

As we have shown in this blog, the asset management industry’s activities are inherently cross-border, with a small number of large entities playing a central role. These entities have a significant Pan-European market footprint and yet remain supervised at the national level.

The EU’s supervisory architecture must keep pace with the growth ambitions of the SIU. Focusing on the most relevant actors, identified by clear and simple criteria, would help us monitor the most significant risks. Tasking ESMA with fostering closer supervisory convergence for these entities could help eliminate supervisory blind spots and reduce fragmentation. Combined with a stronger macroprudential framework for the wider sector, this would safeguard financial stability, support a truly integrated capital market and help to channel savings more efficiently.

The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.

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