3 European market trends to watch

Explore key insights from our global perspective as a corporate trust and fund services provider in Europe and the U.S. – and our outlook for what could be coming down the road.

At U.S. Bank, we’re in the unique position of providing integrated fund administration, corporate trust and depositary solutions across Europe. From this viewpoint, here are three growing trends we’re seeing affect different marketplace sectors.

Trend #1: The high-yield bond market is showing promising new opportunities.

Uncertainty and volatility have defined the high-yield market over the past few years. Major macroeconomic events – geopolitical conflict, rising interest rates and global recession concerns – contributed a long dip in investor appetite. But now, as the dust settles, that market disruption seems to have unearthed a variety of new opportunities.

According to a recent Funds Europe article, “the high-yield market is living up to its name. As rates have shifted higher, yields on high-yield bonds continue to increase, even in the higher-quality part of the market." Numerous sectors are thriving, and the article goes on to state that “investors can now find excellent deals in better-quality companies.”

In this encouraging environment, it’s critical to work with an experienced service provider. When a window of opportunity opens, you need someone with all the pieces in place to meet tight deadlines and confidently, efficiently close the deal.

You’re best served when you partner with a specialized team of highly focused professionals who’ve done these deals before, who can guide you based on their deep expertise and who provide everything you need – paying agent, note trustee & security trustee and loan agency services for the overall financing and more – in a one-stop-shop solution.

Read more: High-yield bond issuance: how to avoid 5 common pain points

Read more: High-yield bond issuance: 5 traits lawyers should look for in a service provider

Trend #2: ETF innovation in the U.S. is carrying over to European markets.

When you look at the ETF space, what happens in the U.S. generally tends to happen in Europe 2-3 years later.

The world is more connected now that it’s ever been, and macro-economic factors impacting the U.S. echo in Europe. In turn, investment products that reflect the U.S. environment will eventually find their way to Europe in one shape or form. At a more granular level, investors themselves are becoming more global in their outlook. Demand for specific products and strategies on one part of the globe gets reflected more easily elsewhere.

Here at U.S. Bank, we’re able to take a broad look at what’s happening on both sides of the Atlantic. A few major trends we’re seeing carry over from the U.S. to Europe are these:

• The prevalence of actively managed ETFs
• The prevalence of ETF platforms
• The rise of ETFs based on single stocks or variations of single-stock exposure.

It’s likely we’ll see these trends and others expand and evolve in Europe in the years to come to accommodate demand and adapt to its regulatory environment.

Read more: Ask an expert Q&A: 3 US ETF trends and their impact in Europe

Trend #3: Private capital market expansion is influencing product design.

Alongside significant growth in Luxembourg private capital markets, a trend is emerging to make private assets more accessible to larger groups of investors – creating a variety of challenges in terms of product design.

Private capital funds have traditionally been closed-end, long-term investments for institutional investors. But a recent shift to open up markets to other qualified investors is blurring the lines between private assets and more traditional asset classes.

This shift creates numerous challenges for fund managers – but mainly, how to find the right product design to manage the liquidity of these funds.

As managers work to build more flexible funds, it’s important they find an in-domicile service provider with infrastructure and service model flexibility to match. At U.S. Bank, our operating model was designed to be adaptable and to accommodate nearly any type of fund structure or strategy.

Read more: Luxembourg private capital growth demands your attention

Benefits of a strong partnership

As the European market continues to expand and evolve, you need a partner with experience and expertise to guide you toward the right solutions for your unique needs.

At U.S. Bank, we offer the perfect balance of big-bank strength and boutique-shop client service. Our talented team provides end-to-end fund administration, transfer agent, depositary, corporate trust and custody services in one unified solution – flexible and customizable to fit nearly any type of fund structure or strategy.

While many firms outsource functions to lower-cost countries, our model at U.S. Bank is to control quality by using teams that are located in-domicile and that provide support in your time zone. Even with our expansive range of services, clients benefit from having a single point of contact located in their jurisdiction, so they know exactly where to go to get the information they need.

At U.S. Bank, we serve as a single provider for depositary, custody, bank account, domiciliation, corporate secretary, fund administration and transfer agency services across London, Ireland and Luxembourg. To learn more about our integrated offering, visit our website or contact us.