It was not surprising that February 2022 was in general a negative month for the European fund industry given the geopolitical situation in Europe, the still ongoing COVID-19 pandemic, and the sluggish market environment. That said, the promoters of mutual funds (-€67.6 bn) faced outflows, while the promoters of ETFs (+€9.2 bn) enjoyed inflows. Within this market environment and given the economic uncertainties, one would expect that European investors sold long-term funds and bought money market products. Therefore, it is somewhat surprising that European investors sold money market products, which are normally considered safe-haven investments. As a result, the overall fund flow numbers are heavily impacted by the high outflows from money market products (-€49.4 bn). This means that long-term funds faced “only” estimated net outflows of €9.0 bn within this market environment. Nevertheless, it looks like European investors are taking rising interest rates—caused by the increased inflation rates around the globe—into consideration as they further sold bond products over the course of February.
In more detail, mixed-assets funds (+€8.3 bn) were by far the best-selling asset type overall for February 2022. The category was followed by equity funds (+€4.1 bn), commodities funds (+€1.4 bn), real estate funds (+€0.9 bn), and “other” funds (+€0.1 bn). On the other side of the coin, alternative UCITS funds (-€0.6 bn), bond funds (-€23.2 bn), and money market funds (-€49.4 bn) faced outflows.
Graph 1: Estimated Net Flows by Asset and Product Type – February 2022 (in bn EUR)
Source: Refinitiv Lipper
Money Market Products
With a market share of 9.97% of the overall assets under management in the European fund management industry, money market products are the fourth largest asset type. Therefore, it is worthwhile to briefly review the trends in this market segment. As the volatility increased in a rough market environment it was surprising that European investors reduced their money market positions (-€49.4bn) over the course of February. Opposite to their active peers (-€49.7bn), ETFs investing in money market instruments contributed estimated net inflows of €0.3 bn to the total.
Money Market Products by Lipper Global Classification
In more detail, Money Market SEK (+€0.4 bn) was the best seller within the money market segment, followed by Money Market Global (+€0.4 bn) and Money Market CHF (+€0.3 bn). At the other end of the spectrum, Money Market EUR (-€34.5 bn) suffered the highest net outflows overall, bettered by Money Market GBP (-€9.1 bn) and Money Market USD (-€6.3 bn).
This flow pattern revealed that European investors sold money market products denominated in the euro, USD, and GBP. These flows might be a sign that European investors are still in a risk-on mode even as the volatility in the securities market has increased over the course of the month. In conjunction with the asset allocation decisions of portfolio managers, these shifts in the money market segment might have also been caused by corporate actions such as cash dividends or cash payments, since money market funds are also used by corporations as replacements for cash accounts.
Graph 2: Estimated Net Flows in Money Market Products by LGC – February 2021 (Euro Billions)
Source: Refinitiv Lipper
Fund Flows by Lipper Global Classifications
When it comes to overall sales for February, it was not surprising that Equity Global (+€4.3 bn) dominated the table of the 10 best-selling peer groups by estimated net flows since funds from this classification have been somewhat in favor with European investors for some time now. It was followed by Mixed Asset EUR Flexible – Global (+€3.8 bn), Equity Emerging Markets Global (+€3.5 bn), Bond EMU Government Short Term (+€2.8 bn), and Bond EMU Government Medium Term (+€2.0 bn).
Graph 3: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, February 2022 (Euro Millions)
Source: Refinitiv Lipper
On the other side of the table, Money Market EUR (-€34.5 bn) faced the highest estimated net outflows for February, bettered by Money Market GBP (-€9.1 bn) and Bond EUR Corporates (-€6.5 bn).
A closer look at the best- and worst-selling Lipper Global Classifications for February shows that European investors were still in a risk-on mode despite the challenging market environment. In more detail, European investors took positions in sectors that may offer diversification for their portfolio such as global equities or flexible mixed-assets products.
Fund Flows by Promoters
ASR Bank (+€2.0 bn) was the best-selling fund promoter in Europe for February, ahead of BlackRock (+€2.0 bn), Invesco (+€1.9 bn), State Street Global Advisors (+€1.8 bn), and Goldman Sachs (+€1.6 bn). Given the product ranges of the 10-top promoters and the overall fund flow trends, it was not surprising to see that ETFs played a major role for BlackRock, Invesco, State Street Global Advisors, and UBS in terms of fund distribution success of the respective promoters in Europe.
It is noteworthy that inflows into money market products have impacted the overall flows and the respective positions in the league table for Goldman Sachs (+€2.1 bn) and KBC (+€2.6 bn).
Graph 4: Ten Best-Selling Fund Promoters in Europe, February 2022 (Euro Millions)
Source: Refinitiv Lipper
Considering the single-asset classes, UBS (+€2.3 bn) was the best-selling promoter of bond funds, followed by State Street Global Advisors (+€1.2 bn), Invesco (+€0.8 bn), ASR Bank (+€0.8 bn), and Barings (+€0.4 bn).
Within the equity space, BlackRock (+€5.1 bn) led the table, followed by Amundi (+€2.4 bn), HSBC (+€1.2 bn), ASR Bank (+€1.2 bn), and Invesco (+€0.9 bn).
Banca March (+€1.2 bn) was the leading promoter of mixed-assets funds in Europe, followed by Allianz (+€1.2 bn), Amundi (+€0.7 bn), Societe Generale (+€0.7 bn), and KBC (+€0.6 bn).
Amundi (+€0.6 bn) was the leading promoter of alternative UCITS funds for the month, followed by Schroders (+€0.3 bn), Carmignac (+€0.3 bn), Kepler (+€0.2 bn), and LGT Group (+€0.2 bn).
Fund Flows by Fund Domiciles
Single-fund domicile flows (including those to money market products) showed, in general, a negative picture during February. Eighteen of the 34 markets covered in this report showed estimated net outflows, and 16 showed net inflows. Switzerland (+€2.9 bn) was the fund domicile with the highest net inflows, followed by Denmark (+€2.4 bn), Spain (+€1.6 bn), Belgium (+€0.7 bn), and Germany (+€0.6 bn). On the other side of the table, France (-€32.5 bn) was the fund domicile with the highest outflows, bettered by Luxembourg (-€23.6 bn) and Ireland (-€4.5 bn). It is noteworthy that the overall fund flows for France (-€31.0 bn), Luxembourg (-€17.3 bn), and Ireland (-€5.7 bn) were impacted by outflows within the money market segment.
Graph 5: Estimated Net Sales by Fund Domiciles, February 2022 (Euro Billions)
Source: Refinitiv Lipper
Within the bond sector, funds domiciled in the Czech Republic (+€0.2 bn) led the table, followed by Liechtenstein (+€0.1 bn) and Switzerland (+€0.1 bn). Bond funds domiciled in Luxembourg (-€12.3 bn), Ireland (-€4.4 bn), and France (-€1.5 bn) were at the other end of the table.
For equity funds, products domiciled in Ireland (+€4.5 bn) led the table for the month, followed by Denmark (+€2.6 bn), Switzerland (+€1.6 bn), Liechtenstein (+€0.6 bn), and Austria (+€0.1 bn). Meanwhile, Germany (-€1.2 bn), Sweden (-€1.1 bn), and Luxembourg (-€1.0 bn) were the domiciles with the highest estimated net outflows from equity funds.
Regarding mixed-assets products, Luxembourg (+€5.9 bn) was the domicile with the highest estimated net inflows, followed by Spain (+€1.6 bn), Germany (+€1.3 bn), Switzerland (+€0.8 bn), and Italy (+€0.4 bn). In contrast, Belgium (-€0.9 bn), Finland (-€0.6 bn), and Sweden (-€0.4 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.
Luxembourg (+€0.7 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by France (+€0.1 bn) and Liechtenstein (+€0.1 bn). Meanwhile, Spain (-€0.8 bn), the UK (-€0.6 bn), and Germany (-€0.1 bn) were at the other end of the table.
The views expressed are the views of the author, not necessarily those of Refinitiv Lipper or LSEG.
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