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March 16, 2015

Monday Morning Memo: Asset Allocation Funds are the Products of choice of European investors for January 2015

by Detlef Glow.

REUTERS/Jose Miguel Gomez

REUTERS/Jose Miguel Gomez

After a weak December the European mutual fund industry returned to its growth pattern in January, enjoying net inflows of €25.7 bn into long-term mutual funds. The majority of these flows were again seen into mixed-asset funds (+€15.6 bn), followed by bond funds (+€7.6 bn), equity funds (+€2.5 bn), alternative/hedge products (+€1.0 bn), and commodity funds (€0.7 bn). In contrast, property funds (-€0.4 bn) and “other” products (-€1.3 bn) suffered net outflows for January.

Money Market Products

In line with the long-term products money market products also enjoyed net inflows for January. In fact, money market funds (+€17.5 bn) posted the highest net inflows of all asset types, while enhanced money market funds (+€0.8 bn) also enjoyed net inflows.

After strong outflows for December 2014, of all the fund sectors covered in the Lipper FMI database money market EUR (+€11.7 bn) saw the highest net inflows for January, followed by money market USD (+€2.9 bn) and money market GBP (+€2.4 bn). With outflows of €89 m money market HUF faced the highest net outflows in the money market segment, bettered somewhat by money market global (-€66 m) and money market AUD (-€60 m). These flows, especially if one compares December 2014 with January 2015, showed once again how active European investors use money market products in their asset allocation.

Graph 1: Estimated Net Sales, January 2015 (Euro Millions)

15-03 Graph 1 - ENS by Asset Type

Source: Lipper FundFile

These inflows lifted the overall net inflows for January to a healthy €44.1 bn.

Fund Flows by Sectors

According to the overall net flows, asset allocation (+€10.6 bn) was the best selling sector with regard to long-term funds, followed by bonds EUR funds (+€4.7 bn) and bonds EUR corporate investment-grade funds (+€3.7 bn) as well as funds of funds conservative (+€3.3 bn) and mixed-asset conservative funds (+€3.0 bn). At the other end of the spectrum equities emerging markets (-€2.8 bn) suffered net outflows, bettered somewhat by bonds USD corporate high yield funds (-€2.1 bn) and bonds global high yield funds (-€1.7 bn) as well as equities Greater China (-€1.3 bn) and equities United Kingdom (-€1.2 bn).

Graph 2: Ten Top Sectors, January 2015 (Euro Millions)

 15-03 Graph 2 - Top Ten Sectors by Flows

Source: Lipper FundFile

Fund Flows by Markets

Single fund market flows for long-term funds showed a mixed but positive picture for January: 10 of the 33 markets covered in this report showed net inflows. The single market with the highest net inflows for January was Switzerland (+€4.1 bn), followed by Germany (+€3.6 bn) and Italy (+€3.3 bn). Meanwhile, the United Kingdom (-€3.2 bn), the Netherlands (-€0.6 bn), and Denmark (-€.0.2 bn) stood on the other side.

Graph 3: Estimated Net Sales by Country, January 2015 (Euro Millions)

 15-03 Graph 3- Market Flows

Source: Lipper FundFile

Within the equity sector funds domiciled in the international fund hubs (Ireland and Luxembourg) (+€4.7 bn) led the table, followed by those domiciled in Switzerland (+€3.3 bn), Sweden (+€0.2 bn), Belgium (+€0.1 bn), and Italy (+€0.1 bn). Meanwhile, equity funds domiciled in the United Kingdom (-€3.5 bn), the Netherlands (-€1.1 bn), and France (-€0.5 bn) stood at the other end of the table.

The net inflows into bond funds were driven by funds domiciled in the international fund hubs (+€3.2 bn), followed by funds domiciled in Germany (+€1.7 bn), Norway (+€0.9 bn), and Spain (+€0.8 bn) as well as Italy (+€0.5 bn). On the other side the United Kingdom (-€1.1 bn) was the domicile with the highest net outflows from bond funds, bettered somewhat by funds domiciled in Sweden (-€0.4 bn) and Denmark (-€0.1 bn). A total of eight countries showed net outflows from bond products.

With regard to mixed-asset products, the flows were driven by net inflows into funds domiciled in the international fund hubs (+€6.0 bn), followed by those domiciled in Italy (+€3.0 bn), Germany (+€2.5 bn), the United Kingdom (+€1.3 bn), and Spain (+€0.8 bn). Overall, only 10 of the 33 countries monitored in the FMI database showed net outflows from mixed-asset products. Portugal (-€27 m) showed the highest net outflows from mixed-asset products.

Fund Flows by Promoters

At the promoter level BlackRock, with net sales of €6.1 bn, was the best selling group of long-term funds for January, ahead of UBS (+€3.0 bn) and State Street (+€2.2 bn).

Graph 4: Ten Best Selling Groups, January 2015 (%)

15-03 Table 1 - Top Ten Groups

Source: Lipper FundFile

Considering the single-asset bases, BlackRock (+€2.5 bn) was the best selling promoter of bond funds for January, followed by State Street (+€0.8 bn) and Vanguard (+€0.7 bn). Within the equity space BlackRock (+€3.9 bn) stood at the top of the table, followed by UBS (+€2.2 bn) and State Street (+€1.4 bn). In addition, Banco Popolare Società Cooperativa (+€1.1 bn), Allianz Global Investors (+€1.1 bn), and Standard Life Investments (+€1.1 bn) were the best selling promoters of mixed-asset products.

Table 1: Ten Best Selling Funds, January 2015 (Euro Millions)

15-03 Table 2 - Top Ten Funds

Source: Lipper FundFile

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