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February 1, 2016

Monday Morning Memo: Review of the European Fund-Flow Trends 2015

by Detlef Glow.

European Fund-Flow Trends 2015

During the year the European mutual fund industry enjoyed net inflows of €328.8 bn into long-term mutual funds. With regard to the overall flow pattern, it seemed European investors were looking for alternative sources to generate bond-like returns, since mixed-asset funds (+€95.4 bn) were the best selling asset type in Europe for the year. Surprisingly, alternative UCITS (+€89.4 bn) were the second best selling type of products, followed by equity funds (+€79.8 bn) and bond funds (+€64.7 bn) as well as real estate products (+€8.4 bn) and commodity funds (+€1.9 bn). “Other” products (-€10.7 bn) were the only product category with net outflows for the year.

In this positive environment for mutual funds the European exchange-traded fund (ETF) industry also saw record inflows and contributed a healthy €70.1 bn to the overall sales of long-term mutual funds for the year.

Graph1: Estimated Net Sales in Europe (Euro Billions)

Source: Thomson Reuters Lipper

Source: Lipper

 

Money Market Products

The fund flows for money market products were very volatile over the course of 2015; European investors use this product as a safe haven during rough market periods, while they also use money market products to implement their investment options with regard to currencies. At the end of 2015 money market products stated net inflows of €57.3 bn for the year. ETFs contributed €1.1 bn to these inflows.

This flow pattern drove the overall sales of mutual funds in Europe to a positive €386.0 bn for 2015.

Money Market Products by Sector

Within the money market segment Money Market USD (+€30.3 bn) was the best selling sector for the year, followed by Money Market GBP (+€17.1 bn) and Money Market Global (+€3.6 bn). At the other end of the spectrum Money Market HUF (-€1.0 bn) and Money Market AUD (-€0.3 bn) suffered the highest net outflows for the year.

Graph 2: Estimated Net Sales by Asset and Product Type as of December 31, 2015 (Euro Billions)

Source: Thomson Reuters Lipper

Source: Lipper

 

Fund Flows by Sectors

Within the segment of long-term mutual funds Equity Europe (+€36.5 bn) was the best selling sector, followed by Bond Global (+€31.1 bn), Mixed-Asset EUR Flexible Global (+€26.1 bn), and Absolute Return Other (+€24.5 bn) as well as Equity Eurozone (+€22.4 bn).

Graph 3: Ten Top and Bottom Sectors, 2015 (Euro Billions)

Source: Thomson Reuters Lipper

Source: Lipper

At the other end of the spectrum the previous year’s best selling sector—Equity US (-€18.3 bn for 2015)—suffered the highest net outflows from long-term mutual funds, bettered somewhat by Equity Asia Pacific ex Japan (-€12.7 bn) and Equity Emerging Markets Global (-€10.4 bn) as well as Guaranteed products (-€9.8 bn) and Mixed-Asset GBP Conservative (-€9.4 bn).

Fund Flows by Markets

Single fund market flows (including money market products) showed a positive picture for 2015, with 22 of the 35 markets covered in this report showing net inflows. Luxembourg (+€212.3 bn), Ireland (+€68.4 bn), France (+€25.8 bn), Germany (+€22.3 bn), and Italy (+€13.3 bn) were the domiciles with the highest overall net inflows. Meanwhile, Spain was the single market with the highest net outflows (-€3.5 bn), bettered somewhat by Hungary (-€2.3 bn) and Isle of Man (-€1.3 bn).

Graph 4: Estimated Net Sales by Country, 2015 (Euro Billions)

Source: Thomson Reuters Lipper

Source: Lipper

Within the equity sector funds domiciled in Luxembourg (+€42.2 bn) led the table for the year, followed by those domiciled in Ireland (+€15.2 bn), Germany (+€10.2 bn), Switzerland (+€7.5 bn), and the United Kingdom (+€6.0 bn). Equity funds domiciled in Belgium (-€4.7 bn), Norway (-€3.2 bn), and Austria (-€0.6 bn) stood on the other end of the table.

For bond funds, products domiciled in Luxembourg (+€47.2 bn) led the table for the year, followed by funds domiciled in Ireland (+€21.0 bn), Switzerland (+€17.8 bn), France (+€5.5 bn), and Denmark (+€3.7 bn). Meanwhile, the United Kingdom (-€10.5 bn) was the domicile with the highest net outflows from bond funds, bettered by funds domiciled in Spain (-€7.5 bn) and Italy (-€5.5 bn).

With regard to mixed-asset products Luxembourg (+€50.2 bn) was the domicile with the highest net inflows, followed by funds domiciled in Germany (+€10.3 bn), Italy (+€9.7 bn), Spain (+€7.3 bn), and Belgium (+€7.0 bn). On the other side of the table funds domiciled in the United Kingdom showed the highest net outflows      (-€6.2 bn), bettered by funds domiciled on the Isle of Man (-€1.4 bn) and in Switzerland (-€0.1 bn).

Fund Flows by Promoters

BlackRock, with net sales of €51.4 bn, was the best selling fund group overall for 2015, ahead of Deutsche Bank (+€20.9 bn) and JPMorgan (+€18.7 bn).

Table 1: Ten Best Selling Fund Promoters, 2015 (Euro Billions)

Source: Thomson Reuters Lipper

Source: Lipper

Considering the single-asset bases, BlackRock (+€26.6 bn) was the best selling promoter of bond funds for the year, followed by Baloise (+€10.2 bn), Nordea (+€5.7 bn), JP Morgan (+€4.3 bn), and Deutsche Bank (+€4.1 bn). Within the equity space BlackRock (+€21.4 bn) stood at the top of the table, followed by State Street (+€16.4 bn), UBS (+€11.3 bn), and Vanguard (+€7.3 bn) as well as Deutsche Bank (+€7.1 bn). Pioneer Investments (+€9.9 bn) was the leading promoter of mixed-asset funds, followed by JP Morgan (+€5.6 bn), KBC (+€5.3 bn), and BlackRock (+€5.1 bn) as well as Allianz (+€4.8 bn).

Best Selling Funds

The ten best selling long-term funds gathered net inflows of €45.7 bn over the course of 2015. The split of the ten best selling funds by asset type was somewhat in line with the sales numbers, with three absolute return products among the ten best selling funds (+€16.1 bn) accounting for the highest inflows on this table, followed by three equity funds (+€15.6 bn), three mixed-asset funds (+€8.8 bn), and one bond fund (+€5.2 bn).

Table 2: Ten Best Selling Funds in 2015 (Euro Millions)

 

Source: Thomson Reuters Lipper

Source: Lipper

 

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