European Fund Market Review

The following report is based on the unique fund flows information delivered through Lipper FundFile, our leading global fund flows database. The charts and tables in this report reflect only the tip of the iceberg in terms of the depth and breadth available from Lipper within FundFile. The report offers a high-level overview of European fund flows activity in 2013.

Lipper FundFile allows deep fund flows analysis of all key geographical markets covering: Asia Pacific, Latin America, the Middle East and Africa, and the U.S., and delivers a truly global fund flows solution.

By gradually building the international reach of global sales data, the high quality and ease of use that have made FundFile the unparalleled source of data and analysis–compiling information on more than 100,000 funds over the past ten years–have been maintained.

The cross-border dimension of the European funds industry–the “international” fund market–can only truly be assessed with Lipper SalesWatch, a unique cooperative, confidential benchmarking service that allows leading fund groups to track their cross-border sales and assets against their competitors’ by country, distribution channel, institutional versus retail activity, and both gross and net sales. This service now counts 50 of the leading asset managers among its members. Some sample data taken from the tool can be seen on pages 17 and 18 of the current report.

Over the course of the year 2013 the European fund industry enjoyed net sales of €183.5bn into mutual funds. These consisted of sales of €96bn into bond funds, €92bn into equity funds and €85bn into mixed-asset funds. The highest outflows were seen in money market funds (-€93bn) and commodity funds (-€8bn). This year stands in considerable contrast to 2012 which saw the complete domination of sales into bond funds. Whilst there is no substantial evidence that the bond bubble is bursting, 2013 has been characterised by a considerable uptake in investor risk appetite which has been reflected by more robust flows into equity funds. Equity sales have increased in all major countries (with the notable exception of Germany with outflows of -€6bn). For 2013 Global and European equities were ranked third and fourth respectively with around €26bn of net sales.

There was a marked inflection point in May and June 2013 with the first mentioning of “tapering” which spooked the market and resulted in large adjustments in fixed income composition. Interestingly, investors didn’t cash in their chips with bonds, but rather de-risked within the sector – moving out of EM debt and local currency bonds into better rated global currency and western high yield bonds. Indeed, global currency debt came in at number two on the sales hit parade at €27bn and more nimble flexible bond funds taking nearly €24bn.

In what is clearly a volatile asset allocation environment, there has been considerable growth into Mixed Asset funds (€85bn) which have proven particularly popular in Italy (€18bn) the UK (€12bn) and Germany (€10bn). The bulk of these mixed flows have come in via the cross border funds (€37bn) showing that the trend may be geographically wider than mere regional sales suggest. Certainly, sophisticated products like Standard Life Gars (€4.2bn) have continued to raise the profile of the sector.

In terms of group success, BlackRock has maintained its number one ranking with €32bn of European sales however, given that this figure includes a substantial book of passive business, JP Morgan should be considered the top active house with flows of €21bn. The most notable omission in the league table is PIMCO. In light of the bond tapering scare, recent poor performance of their flagship fund and the departure of CIO/CEO Mohamed El-Erian, they have slipped from number one in 2012 (€35bn) to outside of the top 25 for 2013.