by Detlef Glow.
European investors pulled back further from long-term mutual funds as the market environment and general sentiment stayed negative. As a consequence, July was the third month posting net outflows from long-term mutual funds after 16 consecutive months showing net inflows. That said, European fund promoters still enjoyed net inflows into mixed-asset funds (+€1.1 bn) and real estate funds (+€0.7 bn), while all the other asset types in the segment of long-term mutual funds witnessed net outflows. Bond funds (-€0.7 bn), “other” funds (-€1.0 bn), commodity funds (-€1.1 bn), and alternative UCITS funds (-€1.9 bn) as well as equity funds (-€2.1 bn) suffered net outflows.
These fund flows added up to overall net outflows of €5.0 bn from long-term investment funds for July. ETFs contributed inflows of €4.2 bn to the overall net flows.
Money Market Products
After two consecutive months with net outflows money market products enjoyed net inflows of €7.9 bn for July. In line with their actively managed peers, ETFs investing in money market instruments posted net inflows (+€0.2 bn).
This flow pattern led the overall fund flows to mutual funds in Europe to net inflows of €3.1 bn for July and to estimated net inflows of €60.2 bn for the year 2018 so far.
Money Market Products by Sector
Money Market USD (+€7.6 bn) and Money Market EUR (+€6.0 bn) were the best selling sectors overall for July, followed at a distance by Money Market SEK (+€0.4 bn). At the other end of the spectrum Money Market GBP (-€5.5 bn) suffered the highest net outflows overall, bettered significantly by Money Market AUD (-€0.1 bn) and Money Market EUR Leveraged (-€0.1 bn). Comparing this flow pattern with the flow pattern for June showed that European investors reduced their positions in the GBP while they built up positions in the U.S. dollar and the euro. These shifts might have been caused by asset allocation decisions as well as for other reasons such as cash dividends or payments, since money market funds are also used by corporations as replacements for cash accounts.
Graph 1: Estimated Net Sales by Asset Type, July 2018 (Euro Billions)
Fund Flows by Sectors
Within the segment of long-term mutual funds Equity US (+€3.5 bn) was once again the best selling sector, followed by Mixed-Asset USD Balanced-US (+€2.0 bn), Bond Emerging Markets Global in Hard Currencies (+€1.5 bn), and Bond EUR (+€1.3 bn) as well as Equity Sector Information Technology (+€1.2 bn).
Graph 2: Ten Top Sectors, July 2018 (Euro Billions)
At the other end of the spectrum Equity Emerging Markets Global (-€1.8 bn) suffered once again the highest net outflows from long-term mutual funds, bettered by Equity Asia Pacific ex Japan (-€1.4 bn) and Target Maturity MA EUR 2035 (-€1.2 bn) as well as Equity Eurozone (-€1.0 bn) and Bond Global High Yield (-€1.0 bn).
Graph 3: Ten Bottom Sectors, July 2018 (Euro Billions)
Fund Flows by Markets (Fund Domiciles)
Single fund domicile flows (including those to money market products) showed in general a negative picture for July, with only 15 of the 34 markets covered in this report showing net inflows and 19 showing net outflows. France (+€9.1 bn), driven by money market products (+€11.4 bn), was the fund domicile with the highest net inflows, followed at a distance by Sweden (+€1.1 bn), Liechtenstein (+€0.5 bn), Norway (+€0.2 bn), and the Netherlands (+€0.2 bn).On the other side of the table the United Kingdom (-€2.9 bn) was the single fund domicile with the highest net outflows, bettered by Italy (-€1.6 bn) and Switzerland (-€0.7 bn).
Graph 4: Estimated Net Sales by Fund Domiciles, July 2018 (Euro Billions)
Within the bond sector, funds domiciled in Luxembourg (+€1.2 bn) led the table for July, followed by those domiciled in Ireland (+€0.4 bn), Sweden (+€0.3 bn), Switzerland (+€0.2 bn), and the Netherlands (+€0.2 bn). Bond funds domiciled in France (-€1.2 bn), Germany (-€0.6 bn), and Spain (-€0.5 bn) stood at the other end of the table.
For equity funds, products domiciled in Luxembourg (+€1.1 bn) led the table for July, followed by funds domiciled in Germany (+€0.6 bn), Liechtenstein (+€0.5 bn), and Sweden (+€0.4 bn) as well as Ireland (+€0.2 bn). Meanwhile, the United Kingdom (-€2.3 bn), France (-€1.3 bn), and Switzerland (-€0.4 bn) were the domiciles with the highest net outflows from equity funds.
With regard to mixed-asset products the United Kingdom (+€0.4 bn) was the domicile with the highest net inflows, followed by funds domiciled in Luxembourg (+€0.3 bn), Switzerland (+€0.2 bn), Ireland (+€0.2 bn), and Belgium (+€0.2 bn). In contrast, Italy (-€0.2 bn), France (-€0.2 bn), and Germany (-€0.1 bn) were the domiciles with the highest net outflows from mixed-asset funds.
Ireland (+€0.7 bn) was the domicile with the highest net inflows into alternative UCITS funds for July, followed by France (+€0.4 bn), Germany (+€0.1 bn), and Spain (+€0.1 bn) as well as Denmark (+€0.03 bn). Luxembourg (-€0.9 bn), bettered slightly by the United Kingdom (-€0.9 bn) and Italy (-€0.9 bn), stood at the other end of the table.
Fund Flows by Promoters
Natixis, with net sales of €5.1 bn, was the best selling fund promoter for July overall, ahead of HSBC (+€3.3 bn) and Groupama (+€2.7 bn). It is noteworthy that the net sales of Natixis (+€5.2 bn), HSBC (+€3.1 bn), and Groupama (+€2.6 bn) were driven by their net sales in the money market segment.
Table 1: Ten Best Selling Promoters, July 2018 (Euro Billions)
Considering the single-asset bases, UBS (+€1.6 bn) was the best selling promoter of bond funds, followed by Morgan Stanley (+€1.5 bn), Vanguard Group (+€1.1 bn), and BlackRock (+€0.7 bn) as well as Nordea (+€0.6 bn).
Within the equity space Vanguard Group (+€0.9 bn) stood at the head of the table, followed by Actiam (+€0.8 bn), State Street (+€0.6 bn), and Capital Group (+€0.5 bn) as well as Pictet (+€0.5 bn).
Allianz (+€2.2 bn) was once again the leading promoter of mixed-asset funds in Europe for July, followed by Union Investment (+€0.5 bn), State Street (+€0.3 bn), and JP Morgan (+€0.2 bn) as well as AXA (+€0.2 bn).
H2O Asset Management (+€0.7 bn) was once again the leading promoter of alternative UCITS funds for the month, followed by Pimco (+€0.3 bn), Old Mutual (+€0.3 bn), and Mercer (+€0.3 bn) as well as BlackRock (+€0.2 bn).
Best Selling Funds
The ten best selling long-term funds gathered at the share-class level total net inflows of €6.6 bn for July. Since mixed-asset funds had the highest overall net inflows for the month, it was not surprising that mixed-asset funds dominated the sales table of the ten top single funds for July, followed by bond funds (+€1.7 bn) and equity funds (+€1.1 bn).
Table 2: Ten Best Selling Long-Term Funds, July 2018 (Euro Millions)