July 27, 2020

Monday Morning Memo: European Fund-Flows Trends, June 2020

by Detlef Glow.

European investors bought further back into mutual funds and ETFs in June. Since the global equity markets stabilized further, investors returned to long-term mutual funds because they expect the massive stimulus packages from central banks and governments globally to keep the interest rates low and to kickstart economic growth after the lockdowns caused by the outbreak of COVID-19 are lifted in more countries around the globe.

As a result, long-term mutual funds posted overall net inflows for the month. Bond funds (+€31.1 bn) were the best-selling long-term asset type for June, followed by equity funds (+€14.1 bn), mixed-assets funds (+€9.3 bn), commodities funds (+€1.0 bn), and real estate funds (+€0.4 bn). On the other hand, “other” funds (-€1.1 bn) and alternative UCITS funds (-1.8 bn) were facing estimated net outflows.

These fund flows added up to overall estimated net inflows of €53.0 bn into long-term investment funds for June. ETFs contributed inflows of €16.3 bn to these flows.

Money Market Products

Since the current market environment is still somewhat fragile, European investors also bought money market products. As a result, money market funds faced estimated net inflows of €37.5 bn. In line with their actively managed peers, ETFs investing in money market instruments contributed estimated net inflows of €1.1 bn to the total.

This flow pattern led to estimated overall net inflows of €90.5 bn for June and overall estimated inflows of €123.0 bn year to date.

Money Market Products by Sector

Money Market EUR (+€24.7 bn) was the best-selling fund sector overall and was also the best seller within the money market segment, followed by Money Market USD (+€12.7 bn) and Money Market GBP (+€0.4 bn). At the other end of the spectrum, Money Market SEK (-€0.3 bn) suffered the highest net outflows in the money market segment, bettered by Money Market EUR Leveraged (-€0.2 bn) and Money Market AUD (-€0.1 bn).

Comparing this flow pattern with the flow pattern for May revealed that European investors further built up their positions in the U.S. dollar and bought back into the euro. In conjunction with the asset allocation decisions of portfolio managers, these shifts 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 1: Estimated Net Sales by Asset Type, June 2020 (Euro Billions)

European Fund Flows - June 2020

Source: Refinitiv Lipper

Fund Flows by Sectors

Equity Global (+€12.1 bn) was the best-selling sector in the segment of long-term mutual funds, followed by Bond Global Corporates USD (+€4.1 bn). Bond EUR Corporates (+€4.0 bn) was the third best-selling long-term sector, followed by Mixed Asset EUR Aggressive – Global (+€3.5 bn) and Bond Global USD (+€3.2 bn).

Graph 2: Ten Top Sectors, June 2020 (Euro Billions)

Source: Refinitiv Lipper

At the other end of the spectrum, Bond EUR (-€2.7 bn) suffered the highest net outflows in the segment of long-term funds, bettered by Equity Emerging Markets Global (-€2.4 bn), Bond USD Corporates (-€2.0 bn), Equity US (-€1.4 bn), and ”Unclassified” products (-€1.2 bn).

Graph 3: Ten Bottom Sectors, June 2020 (Euro Billions)

Source: Refinitiv Lipper

Fund Flows by Markets (Fund Domiciles)

Single-fund domicile flows (including those to money market products) showed, in general, a positive picture during June. Twenty-four of the 34 markets covered in this report showed estimated net inflows, and 10 showed net outflows. Luxembourg (+€28.3 bn) was the fund domicile with the highest net inflows, followed by Ireland (+€26.4 bn), France (+€22.1 bn), the Netherlands (+€8.0 bn), and Germany (+€2.1 bn). On the other side of the table, the U.K. (-€2.4 bn) was the fund domicile with the highest outflows, bettered by Jersey (-€0.9 bn) and Italy (-€0.7 bn). It is noteworthy that the fund flows for France (+€23.1 bn), Luxembourg (+€9.9 bn), and Ireland (+€6.2 bn) were impacted by flows in the money market segment.

Graph 4: Estimated Net Sales by Fund Domiciles, June 2020 (Euro Billions)

European Fund Flows - June 2020

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Luxembourg (+€15.0 bn) led the table, followed by Ireland (+€12.1 bn), Switzerland (+€1.9 bn), the U.K. (+€1.2 bn), and Spain (+€0.9 bn). Bond funds domiciled in France (-€2.0 bn), Denmark (-€0.2 bn), and Guernsey (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in Luxembourg (+€7.1 bn) led the table, followed by Ireland (+€6.8 bn), Belgium (+€2.1 bn), Sweden (+€1.4 bn), and Germany (+€1.4 bn). Meanwhile, the U.K. (-€3.1 bn), Switzerland (-€2.1 bn), and Norway (-€0.4 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, the Netherlands (+€7.1 bn) was the domicile with the highest estimated net inflows for June, followed by the U.K. (+€0.9 bn), Belgium (+€0.6 bn), Ireland (+€0.4 bn), and Switzerland (+€0.3 bn). In contrast, Luxembourg (-€2.3 bn), France (-€0.1 bn), and Spain (-€0.1 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

France (+€1.2 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for June, followed by Ireland (+€0.5 bn), the Netherlands (+€0.2 bn), Guernsey (+€0.2 bn), and Liechtenstein (+€0.1 bn). Meanwhile, Luxembourg (-€1.3 bn), the U.K. (-€1.0 bn), and Italy (-€0.6 bn) were at the other end of the table.

Fund Flows by Promoters

BlackRock was the best-selling fund promoter for June overall, with net sales of €11.3 bn, ahead of ING (+€8.6 bn) and JP Morgan (+€8.5 bn). It is noteworthy that the inflows of JP Morgan (+€5.1 bn) were impacted by flows into money market funds.

Table 1: Ten Best-Selling Promoters, June 2020 (Euro Billions)

European Fund Flows - June 2020

Source: Refinitiv Lipper

Considering the single-asset classes, BlackRock (+€5.6 bn) was the best-selling promoter of bond funds, followed by Credit Suisse Group (+€3.5 bn), PIMCO (+€3.5 bn), JP Morgan (+€2.1 bn), and DWS Group (+€1.3 bn).

Within the equity space, BlackRock (+€2.5 bn) led the table, followed by KBC (+€1.9 bn), DWS Group (+€1.5 bn), JP Morgan (+€1.5 bn), and Morgan Stanley (+€1.2 bn).

ING (+€8.6 bn) was the leading promoter of mixed-assets funds in Europe, followed by Flossbach von Storch (+€0.8 bn), Mercer (+€0.7 bn), Vanguard Group (+€0.5 bn), and MFS Investment Management (+€0.5 bn).

Amundi (+€1.1 bn) was the leading promoter of alternative UCITS funds for the month, followed by Mercer (+€0.4 bn), PIMCO (+€0.3 bn), Fundrock (+€0.3 bn), and Credit Suisse Group (+€0.3 bn).

Best-Selling Funds

The 10 best-selling long-term funds, gathered at the share class level, experienced net inflows of €11.9 bn for June. The general fund-flows trend for the 10 best-selling funds was not in line with the overall fund-flows trend in Europe, as mixed-assets funds dominated the ranks of asset types with regard to the 10 best-selling funds (+€6.3 bn), followed by equity funds (+€4.2 bn) and bond funds (+€1.4 bn). ING Select Fund – Actueel Neutraal B (+$1.9 bn) was the best-selling fund share class for June.

Table 2: Ten Best-Selling Long-Term Funds, June 2020 (Euro Millions)

Source: Refinitiv Lipper

The views expressed are the views of the author and not necessarily those of Refinitiv. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.

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