Monday Morning Memo: Emerging markets are back in the focus of European investors

The European mutual fund industry enjoyed overall net inflows of €50.3 bn for April 2014. As was to be expected, the majority of these inflows (+€49.0 bn) were gathered by long-term mutual funds. Roughly half of these flows were invested in bond funds (+€24.1 bn), followed by equity funds (+€12.0 bn) and mixed-asset products (+€11.0 bn). The positive trend for April was also reflected in the flows into the other asset types; commodity funds (+€0.7 bn), alternative/hedge funds (+€0.6 bn), and funds from the “other” peer group (+€0.6 bn) as well as property products (+€0.5 bn) enjoyed net inflows.

Money Market Products

After massive net outflows for February and March 2014 money market funds enjoyed net inflows of €1.1 bn for April. In addition, enhanced money market funds saw inflows of €0.2 bn for April.

As was the case for March money market GBP saw the highest net inflows (+€3.0 bn) for April, followed by money market global (+€0.3 bn) and money market Scandinavian currencies (+€0.1 bn). On the other side of the table money market USD suffered the highest net outflows (-€1.4 bn) of all money market categories covered in the FundFile database, bettered somewhat by money market EUR (-€0.8 bn) and money market CHF (-€0.2 bn).

Graph 1: Estimated Net Sales, April 2014 (Euro Millions)

Source: Lipper FundFile

Fund Flows by Sectors

Looking at the flows within the single fund categories in the long-term funds segment, asset allocation products (+€6.7 bn) were again the best selling asset class, followed by bonds emerging markets (+€3.8 bn) and bonds flexible (+€3.5 bn) as well as mixed-asset conservative (+€2.7 bn) and equities emerging markets (+€2.6 bn). At the other end of the spectrum guaranteed funds suffered net outflows (-€1.5 bn), bettered somewhat by equities Germany (-€1.0 bn) as well as bonds USD (-€0.7 bn), equities Greater China (-€0.5 bn), and equities North America (-€0.3 bn).

Fund Flows by Markets

Single fund market flows for long-term funds showed a mixed picture for April; 10 of the 33 markets covered in this report showed net outflows. The net inflows were dominated by the flows into funds domiciled in the international fund hubs, i.e., Luxembourg and Ireland (+€31.5 bn). The single market with the highest net inflows was the United Kingdom (+€3.5 bn), followed by Italy (+€3.4 bn) and Spain (+€2.4 bn). Meanwhile, Belgium (-€0.5 bn), Russia (-€0.2 bn), and Austria (-€0.1 bn) stood on the other side.

Graph 2: Estimated Net Sales by Country, April 2014 (Euro Millions)

Source: Lipper FundFile

Fund Flows by Asset Type

Within the bond sector funds domiciled in the international cross-border hubs (+€16.5 bn) dominated the scene, followed by funds domiciled in Spain (+€1.7 bn), Sweden (+€1.3 bn), and Germany (+€1.0 bn) as well as France (+€0.9 bn). On the other side Belgium (-€0.6 bn) was the domicile with the highest net outflows from bond funds, bettered somewhat by funds domiciled in Austria (-€0.2 bn) and Russia (-€0.2 bn).

The international cross-border hubs (+€9.0 bn) also dominated the scene in the equity segment, followed by funds domiciled in the United Kingdom (+€1.5 bn), Sweden (+€0.5 bn), and Switzerland (+€0.5 bn) as well as Italy (+€0.5 bn). On the other side of the table Germany was the domicile with the highest net outflows from equity funds (-€0.3 bn), bettered somewhat by funds domiciled in The Netherlands (-€0.2 bn) and Belgium (-€0.1 bn).

Fund Flows by Promoter

BlackRock, with net sales of €4.1 bn, was the best selling group of long-term funds for April, ahead of JP Morgan Asset Management (+€2.5 bn) and Deutsche Asset & Wealth Management (+€2.0 bn) as well as Allianz Global Investors (+€1.5 bn) and Prudential/M&G (+€1.3 bn).

Graph 3: Market Share of the Ten Best Selling Groups, April 2014 (%)

Source: Lipper FundFile

On a single-asset basis BlackRock was the best selling promoter of bond funds (+€2.4 bn) for April, followed by Prudential/M&G (+€1.3 bn) and JP Morgan Asset Management (+€1.2 bn). Within the equity space JP Morgan Asset Management (+€1.0 bn) stood at the top of the table, followed by BlackRock (+€1.0 bn) and Source (+€0.9 bn).

Best Selling Funds

The best selling fund in Europe during April was Scottish Widows Corporate Bond—from the bonds GBP corporate investment-grade category—with estimated net sales of €0.9 bn, followed by M&G Optimal Income Fund—from the bonds flexible category (+€0.8 bn)—and Swedbank Robur International-Total Return Fixed Income—from the bonds SEK category (+€0.8 bn).

The views expressed are the views of the author, not necessarily Thomson Reuters’.