The Financial & Risk business of Thomson Reuters is now Refinitiv

All names and marks owned by Thomson Reuters, including "Thomson", "Reuters" and the Kinesis logo are used under license from Thomson Reuters and its affiliated companies.

August 11, 2014

Monday Morning Memo: Bonds are European investors’ Darlings

by Detlef Glow.

The European mutual funds industry enjoyed overall net inflows of €38.1 bn into long-term mutual funds for June 2014. The net inflows for June were driven mainly by flows into bond funds (+€19.2 bn), followed by mixed-asset funds (+€12.1 bn) and equity products (+€6.0 bn). Also, property products (+€0.8 bn) as well as alternative/hedge funds (+€0.5 bn) saw net inflows, while commodity funds (-€0.001 bn) and funds from the “other” peer group (-€0.5 bn) faced outflows.

REUTERS/Edgar Su (SINGAPORE

REUTERS/Edgar Su (SINGAPORE

Over the course of the first six months of the year the European fund industry enjoyed net inflows of €244.1 bn into long-term mutual funds. With net inflows of €114.4 bn, bond funds were the main contributor, followed by mixed-asset funds (+€62.5 bn) and equity products (+€60.7 bn) as well as property funds (+€0.8 bn), alternatives/hedge funds (+€0.3 bn), and funds from the “other” peer group (+€0.3 bn), while commodity funds (-€0.4 bn) was the only asset class that suffered net outflows.

Money Market Products

In addition to the long-term mutual funds, enhanced money market products enjoyed net inflows (+€0.3 bn), while money market funds themselves faced net outflows of €10.9 bn for June. Despite these outflows, money market funds still posted net inflows of €6.0 bn for the first half of 2014.

While money market GBP saw the highest net inflows (+€0.7 bn) for June, money market EUR once again suffered the highest net outflows (-€10.3 bn) of all the fund categories covered in the FundFile database.

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

14-08-11 Flows by Asset Type

Source: Lipper FundFile

Fund Flows by Sectors

With regard to long-term funds, asset allocation products (+€6.6 bn) were the best selling asset class, followed by bonds flexible (+€3.1 bn) and bonds global currencies (+€2.9 bn) as well as equities Europe (+€2.9 bn) and mixed-asset balanced (+€2.7 bn). At the other end of the spectrum equities global (-€3.4 bn) suffered net outflows, bettered by bonds GBP corporate investment-grade (-€2.6 bn) as well as bonds USD corporate high yield (-€1.8 bn), guaranteed funds (-€1.0 bn), and equities Germany (-€0.8 bn).

The asset allocation sector (+€39.7 bn) was the best selling long-term fund sector over the course of 2014 so far, followed by equities Europe (+€19.0 bn), bonds flexible (+€15.6 bn), mixed-asset conservative (+€13.6 bn), and bonds EUR (+€13.5 bn). On the other side of the table guaranteed funds (-€9.5 bn), equities Pacific ex-Japan funds (-€3.4 bn), and bonds USD (-€3.2 bn) suffered the highest net outflows for the first half of 2014, bettered somewhat by bonds GBP corporate investment grade (-€2.9 bn) as well as equities Greater China (-€2.9 bn).

Fund Flows by Markets

The fund market inflows for long-term funds were dominated by funds domiciled in the international cross-border hubs (+€24.7 bn), followed by funds domiciled in Italy (+€4.3 bn), the United Kingdom (+€3.0 bn), and Spain (+€3.0 bn). Meanwhile, Norway (-€1.2 bn), Belgium (-€0.7 bn), and The Netherlands (-€0.6 bn) stood on the other side.

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

14-08-11 Flows by Market

Source: Lipper FundFile

The inflows into equity funds were also dominated by international cross-border funds (+€3.6 bn), followed by funds domiciled in the United Kingdom (+€2.7 bn), Italy (+€0.7 bn), Spain (+€0.4 bn), and Germany (+€0.3 bn). Funds domiciled in Norway (-€1.1 bn), The Netherlands (-€0.3 bn), and Belgium (-€0.3 bn) stood at the other end of the table.

In the bond sector funds domiciled in the international cross-border hubs (+€15.3 bn) dominated the scene, followed by funds domiciled in Spain (+€1.9 bn), Switzerland (+€1.3 bn), and Germany (+€0.9 bn) as well as Sweden (+€0.7 bn). On the other side the United Kingdom (-€1.7 bn) was the domicile with the highest net outflows from bond funds, bettered somewhat by funds domiciled in Belgium (-€0.6 bn) and The Netherlands (-€0.3 bn).

Fund Flows by Promoter

BlackRock, with net sales of €2.7 bn, was the best selling group of long-term funds for June, ahead of UBS (+€2.1 bn), Woodford Investment (+€2.1 bn), Intesa SanPaolo Group (+€2.1 bn), and Prudential/M&G (+€1.7 bn). BlackRock (+€19.3 bn) was the best selling group for first half 2014, ahead of UBS (+€11.0 bn) and Den Norske Bank (DNB) (+€9.3 bn). It is noteworthy that the success of DNB was related to the inflows into three institutional funds during January and February.

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

14-08-11 Market Share Groups

Source: Lipper FundFile

On a single-asset basis BlackRock (+€2.7 bn) was the best selling promoter of bond funds for June, followed by UBS (+€1.9 bn) and Royal Bank of Canada (RBC) (+€1.2 bn). Within the equity space Woodford Investment (+€2.1 bn) stood at the top of the table, followed by Prudential/M&G (+€1.2 bn) and KBC (+€1.1 bn).

Article Topics

Get In Touch

Subscribe

We have updated our Privacy Statement. Before you continue, please read our new Privacy Statement and familiarize yourself with the terms.×