Europe’s mutual fund industry is consolidating, with a total of 698 funds leaving the market and 506 entering the field, a trend that industry figures have said is necessary to wring savings from economies of scale.

The quantity of newly-launched funds for the first quarter of this year showed the lowest number for the first quarter results of the last five years. Compared with the peak in Q1 2008, the number of newly-launched products for 2012 fell around 50 per cent, Lipper, the research firm, said.

The net number of funds available for sale in the first three months of this year fell by 1,032 funds compared to a year before. As of the end of March 2012 there were 32,158 mutual funds registered for sale in Europe.

The number of liquidations went up approximately 11 per cent, comparing Q1 2012 with Q1 2011, to 493 from 446.

“The slight increase of liquidations, as well as the increase of fund mergers, might have been driven by the industry’s continued focus on fund range consolidation to reduce ongoing costs,” Lipper said.  

Luxembourg continued to dominate the fund market in Europe, hosting 8,439 funds, followed by France, where 4,743 funds were domiciled. Equity funds held the lion’s share of the field, with 37 per cent of the funds available for sale, followed by mixed-asset funds at 24 per cent.