Bullish European investors favour equities in January 2014

For January the European mutual fund industry enjoyed overall net inflows of €23.7 bn for long-term mutual funds. Opposite to the previous month, for January money market products enjoyed net inflows (+€25.2 bn). The net inflows into long-term mutual funds were mainly driven by flows into equity funds (+€12.9 bn) and mixed-asset funds (+€7.0 bn). In addition, bond funds saw net inflows of €5.0 bn. On the other side of the table, alternative/hedge funds (-€0.003 bn) stood nearly flat, while property products (-€0.3 bn) as well as “other” products (-€0.3 bn) and commodity funds (-€0.6 bn) showed moderate net outflows.

It is remarkable that the flows into bond funds were driven by two institutional funds (DNB AM Kort Obligasjon and DNB AM Lang Obligasjon) that were launched in January and enjoyed combined net inflows of €4.4 bn for January.

REUTERS/Mike Blake

Following the sales pattern for long-term funds were equities Europe (+€4.4 bn) and equities North America (+€4.2 bn), followed by asset allocation products (+€3.9 bn),  bonds NOK (+€3.1 bn), and equities speciality (+€2.6 bn). At the other end of the spectrum bonds emerging markets in local currencies suffered net outflows of around €2.7 bn, bettered somewhat by guaranteed funds (-€2.6 bn), equities Pacific ex-Japan (-€2.4 bn), equities emerging markets (-€1.9 bn), and bonds global currencies (-€1.8 bn).

Early indicators for February activity

While the focus of this report is to summarise comprehensive data on mutual fund flows across Europe for January 2014 (see above and over), there is also an opportunity to provide some early indicators of provisional flows data for February 2014. Looking at Luxembourg- and Ireland-domiciled funds, equity funds—with projected net inflows of around €9.6 bn—might take the lead in net flows for 2014, followed by bond funds (+€8.6 bn) and mixed-asset products (+€4.0 bn). It seems that money market products may continue to be heavily used by institutional investors; the estimates indicate net inflows of around €8.6 bn. Even though these numbers are estimates, it seems equity and mixed-asset funds are in European investors’ favour in 2014.

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IN BRIEF

• The European funds industry enjoyed net inflows of €23.7 bn to long-term mutual funds for January 2014.
• Single fund market flows for long-term funds showed a mixed picture for January, with Norway (+€3.8 bn), France (+€2.9 bn), and Spain (+€2.0 bn) leading the table. Meanwhile, the United Kingdom (-€0.8 bn), the Netherlands (-€0.7 bn), and Denmark (-€0.6 bn) stood on the other side.
• While money market—with estimated net inflows of €24.0 bn—was the best selling asset class overall for January, equity funds showed the highest net inflows (+€12.9 bn) for long-term mutual funds.
• Den Norske Bank (DNB), with net sales of €5.7 bn, was the best selling group of long-term funds for January, ahead of BlackRock (+€3.0 bn) and Deutsche Asset & Wealth Management (+€1.9 bn).
• Provisional January figures for Luxembourg- and Ireland-domiciled funds suggest that equity funds, with estimated net inflows of around €9.6 bn, will be the best selling products for February 2014.

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