Q&A with Dirk Grosshans:
Making Inroads into the European Market

Why is the European market an attractive opportunity for asset managers globally?

Europe offers tremendous growth potential, with the investment funds market nearing 20 trillion EUR in net assets. The market is diverse, and there is a clear appetite for a range of investment strategies, particularly coming from institutional investors in continental Europe. While presenting many challenges in terms of regulatory landscape navigation and technical infrastructure for cross-border distribution, the access to European markets can be highly lucrative for many asset managers with significant long-term growth potential, as we’ve witnessed with the success of many international asset managers.
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What are the first steps that asset managers should consider when planning to enter the European market?

Choosing the right fund domicile is one of the most important early-stage decisions. Luxembourg and Ireland are advantageous options, both providing a stable environment and a well-established brand for cross-border fund distribution. Furthermore, choosing to partner with a SuperManCo and fund administrator like Universal Investment, which has a robust presence across European markets, can greatly alleviate complexity in the process, especially when dealing with local regulations, fund structuring, and targeted distribution.
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Can you elaborate on the importance of having a targeted distribution strategy?

Absolutely. Europe is not a one-size-fits-all market. Fund managers benefit by focusing on specific markets or regions where they see the most opportunity. Through the partnership with a ManCo which has built strong local relationships and distribution networks, managers can gain a foothold and expand strategically over time by focusing on active management and delivering strong returns for investors. Identifying an initial target group of investors—such as institutional investors—is also crucial. Fund managers must then either invest resources to develop a deep understanding of their regulatory requirements or select a collaborative partner who possesses this expertise in-house.
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How can specialisation benefit fund managers in Europe?

Specialisation is particularly important, as there is growing demand in Europe for managers who can provide access to niche or specialist asset classes, such as private equity or debt. Partnering with established service providers like Universal Investment, who already have operational infrastructure and distribution relationships, can accelerate entry and build credibility faster with local and regional investors.
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What are some of the key challenges related to regulatory compliance in Europe?

Navigating the UCITS and AIFMD (alternative investment fund manager directive) regulations can be a major hurdle for fund managers less familiar with European regulatory frameworks. Introduced by the European Union, these frameworks govern the activities of retail securities funds (UCITS) and alternative investment funds (AIFs). To mitigate complexity, many managers opt to outsource these regulatory responsibilities. Appointing a third-party ManCo or an EU AIFM allows non-European managers to enter the market without the need to establish their own infrastructure, reducing both effort and risk.
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How does ESG (Environmental, Social, and Governance) investing play into the European market entry strategy?

Sustainability is no longer a niche—it’s becoming a critical factor for investors. ESG considerations are incredibly important in Europe, with investors showing a strong and growing demand for sustainable investment strategies which also deliver steady returns. Managers who align with this trend, such as Dimensional Fund Advisors, who focus on sustainable funds within their European expansion, can seize significant opportunity to tap into a valuable and rapidly expanding segment of the market.
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What is your final piece of advice for fund managers looking to establish themselves in Europe?

Patience and adaptability are essential. Building a presence in Europe requires a long-term perspective and a commitment to operational excellence. By focusing on the right tactics—such as selecting the right partners, targeting specific markets, and addressing regulatory complexities—managers can gradually establish themselves in the European market and attract a diverse pool of investors.
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