by Detlef Glow.
As the liquidity on the exchanges goes down over the summer, the security markets become more vulnerable to short-term losses and therefore less predictable. In this regard, a number of investors follow the rule “Sell in May and go away.” However, this year investors in Europe were net buyers of mutual funds for May. As a result the European mutual fund industry enjoyed overall net inflows of €35.3 bn into long-term mutual funds for May. Roughly half of these flows were gathered by bond funds (+€18.6 bn), followed by mixed-asset products (+€9.7 bn) and equity funds (+€6.2 bn). The positive trend in May was also reflected in the flows into the other asset types; alternative/hedge funds (+€0.6 bn) and funds from the “other” peer group (+€0.3 bn) enjoyed net inflows as well as property products (+€0.3 bn). Commodity funds (-€0.4 bn) was the only product type facing net outflows for May.
Over the course of the year 2014 so far the European fund industry enjoyed net inflows of €202.4 bn into long-term mutual funds. With net inflows of €94.7 bn so far, bond funds were the main contributor, followed by equity funds (+€51.0 bn) and mixed-asset products (+€50.0 bn). Funds from the “other” peer group (+€4.4 bn), property products (+€1.7 bn), and alternatives/hedge funds (+€1.7 bn) enjoyed net inflows also, while commodity funds (-€0.5 bn) suffered net outflows.
Money Market Products
Even money market products posted net inflows for May, with money market funds enjoying inflows of €0.6 bn and enhanced money market funds showing inflows of €0.1 bn.
After strong net outflows (-€1.4 bn) for April, money market USD saw by far the highest net inflows (+€8.1 bn) for May, followed by money market NOK (+€0.1 bn) and money market AUD (+€0.05 bn). On the other side of the table, money market EUR suffered the highest net outflows (-€4.6 bn) of all fund sectors covered in the Lipper FundFile database, bettered somewhat by money market GBP (-€3.0 bn) and money market CHF (-€0.2 bn).
Graph 1: Estimated Net Sales, May 2014 (Euro Millions)
Source: Lipper FundFile
Fund Flows by Sectors
An analysis of the flows on the sector level shows that asset allocation products (+€6.1 bn) were once again the best selling asset class in the long-term funds segment, followed by bonds emerging markets (+€3.4 bn) and equities emerging markets (+€2.8 bn) as well as mixed-asset conservative (+€2.8 bn) and bonds EUR (+€2.1 bn). At the other end of the spectrum guaranteed funds (-€1.4 bn) suffered net outflows, bettered somewhat by equities North America mid-/small-caps (-€0.8 bn) along with equities Switzerland (-€0.8 bn), equities United Kingdom (-€0.8 bn), and bonds USD (-€0.5 bn).
Fund Flows by Markets
Single fund market flows for long-term funds showed a positive but nevertheless mixed picture for May; 8 of the 33 markets covered in this report showed net outflows. The single market with the highest inflows was Italy (+€4.0 bn), followed by Spain (+€2.8 bn) and France (+€2.2 bn). Meanwhile, Switzerland (-€1.6 bn), the Netherlands (-€0.4 bn), and Belgium (-€0.1 bn) stood on the other side of the table.
Graph 2: Estimated Net Sales by Country, May 2014 (Euro Millions)
Source: Lipper FundFile
Fund Flows by Asset Type
Within the bond sector funds domiciled in the international cross-border hubs (+€11.7 bn) dominated the scene, followed by funds domiciled in Italy (+€1.7 bn), Spain (+€1.6 bn), and France (+€1.5 bn) as well as Germany (+€0.4 bn). On the other side Belgium (-€0.4 bn) was the domicile with the highest net outflows from bond funds, bettered somewhat by funds domiciled in the Netherlands (-€0.1 bn) and Russia (-€0.1 bn).
The international cross-border hubs (+€6.0 bn) also dominated the scene in the equity segment, followed by funds domiciled in Spain (+€1.0 bn), Finland (+€0.6 bn), and Norway (+€0.5 bn) as well as Sweden (+€0.4 bn). On the other side of the table Switzerland was the domicile with the highest net outflows from equity funds (-€2.0 bn), bettered by funds domiciled in the United Kingdom (-€0.6 bn) and Germany (-€0.5 bn).
Fund Flows by Promoter
Once again, BlackRock, with net sales of €3.4 bn, was the best selling group of long-term funds for May, ahead of UBS (+€1.3 bn) and Unicredit/Pioneer (+€1.3 bn) as well as Anima (+€1.3 bn) and JP Morgan Asset Management (+€1.2 bn).
Graph 3: Market Share of the Ten Best Selling Groups, May 2014 (%)
Source: Lipper FundFile
On a single-asset basis BlackRock was the best selling promoter of bond funds (+€1.5 bn) for May, followed by Anima (+€1.0 bn) and Royal Bank of Canada (+€0.9 bn) as well as UBS (+€0.8 bn) and Prudential/M&G (+€0.7 bn).
Within the equity space BlackRock (+€1.7 bn) stood at the top of the table, followed by KBC (+€1.3 bn) and Société Générale (+€0.6 bn) as well as Deutsche Asset & Wealth Management (+€0.6 bn) and Kommunal Landspensjonskasse (+€0.5 bn).
Best Selling Funds
The best selling fund in Europe for May was Pioneer Structured Solution Fund-Unicredit a Formula Europa Luglio 2019—from the protected funds category—with estimated net sales of €0.7 bn, followed by M&G Optimal Income Fund—from the bonds flexible category (+€0.7 bn)—and Mercer Global Investments-Euro Nominal Bond Long Duration Fund—from the bonds EUR category (+€0.6 bn). Pioneer Structured Solution Fund-Unicredit A Formula Selezione Dividendo Luglio 2019—from the protected funds category (+€0.6 bn)—and Russell Investment Company PLC-Acadian Emerging Markets Equity UCITS II Fund—from the equity emerging markets category (+€0.6 bn)—also benefitted from net inflows.
The views expressed are the views of the author, not necessarily those of Refinitiv.