August 24, 2020

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

by Detlef Glow.

European investors bought further back into mutual funds and ETFs in July. 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 interest rates low and to foster global 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 (+€24.2 bn) were the best-selling long-term asset type for July, followed by equity funds (+€14.4 bn), mixed-assets funds (+€4.9 bn), and commodities funds (+€2.0 bn). On the other hand, real estate funds (-€0.1 bn), “other” funds (-€0.7 bn), and alternative UCITS funds (-2.6 bn) were facing estimated net outflows.

These fund flows added up to overall estimated net inflows of €42.2 bn into long-term investment funds for July. ETFs contributed inflows of €13.2 bn to these flows.

Money Market Products

Since the current market environment is still somewhat fragile, European investors put some money on the sideline and bought money market products. As a result, money market funds were the best-selling asset type for the month, enjoying estimated net inflows of €69.0 bn. Unlike their actively managed peers, ETFs investing in money market instruments contributed estimated net outflows of €0.1 bn to the total.

This flow pattern led to estimated overall net inflows of €111.2 bn for July and overall estimated inflows of €239.0 bn year to date.

Money Market Products by Sector

Money Market EUR (+€42.5 bn) was the best seller within the money market segment and also the best-selling fund sector overall, followed by Money Market USD (+€18.9 bn) and Money Market GBP (+€7.6 bn). At the other end of the spectrum, Money Market CHF (-€0.2 bn) suffered the highest net outflows in the money market segment, bettered by Money Market SEK (-€0.1 bn) and Money Market Global (-€0.01 bn).

Comparing this flow pattern with the flow pattern for May revealed that European investors further built up their positions in the euro, the U.S. dollar, and the pound sterling. 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, July 2020 (Euro Billion)

European Fund Flows Review, July 2020

Source: Refinitiv Lipper

Fund Flows by Sectors

Equity Global (+€8.5 bn) was the best-selling sector in the segment of long-term mutual funds, followed by Bond EUR Corporates (+€3.3 bn). Bond Global EUR (+€3.0 bn) was the third best-selling long-term sector, followed by Bond Global Corporates USD (+€2.8 bn) and Equity Sector Information Technology (+€2.8 bn).

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

European Fund Flows Review, July 2020

Source: Refinitiv Lipper

At the other end of the spectrum, Equity Global ex UK (-€3.6 bn) suffered the highest net outflows in the segment of long-term funds, bettered by Bond USD (-€3.6 bn), Equity Emerging Markets Global (-€1.6 bn), Bond USD Medium Term (-€1.6 bn), and Equity Global Income (-€1.2 bn).

Graph 3: Ten Bottom Sectors, July 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 July. Twenty-three of the 34 European markets covered in this report showed estimated net inflows, and 11 showed net outflows. Ireland (+€40.8 bn) was the fund domicile with the highest net inflows, followed by France (+€33.6 bn), Luxembourg (+€28.9 bn), Germany (+€1.9 bn), and the Netherlands (+€1.8 bn). On the other side of the table, the U.K. (-€1.1 bn) was the fund domicile with the highest outflows, bettered by Italy (-€0.8 bn) and Jersey (-€0.7 bn). It is noteworthy that the fund flows for France (+€33.3 bn), Ireland (+€20.6 bn), and Luxembourg (+€16.1 bn) were impacted by flows in the money market segment.

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

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Ireland (+€11.5 bn) led the table, followed by Luxembourg (+€6.9 bn), Switzerland (+€1.4 bn), France (+€1.1 bn), and the U.K. (+€0.8 bn). Bond funds domiciled in Germany (-€0.3 bn), Italy (-€0.1 bn), and Guernsey (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in Luxembourg (+€8.4 bn) led the table, followed by Ireland (+€5.7 bn), Germany (+€1.6 bn), Belgium (+€1.3 bn), and Sweden (+€1.4 bn). Meanwhile, the U.K. (-€2.5 bn), France (-€1.1 bn), and Spain (-€0.4 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, the U.K. (+€1.7 bn) was the domicile with the highest estimated net inflows for July, followed by the Netherlands (+€1.2 bn), Luxembourg (+€0.4 bn), Ireland (+€0.4 bn), and Switzerland (+€0.4 bn). In contrast, France (-€0.4 bn), Spain (-€0.3 bn), and Jersey (-€0.1 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Ireland (+€1.3 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for July, followed by France (+€0.7 bn), Spain (+€0.1 bn), Denmark (+€0.04 bn), and Poland (+€0.02 bn). Meanwhile, Luxembourg (-€3.0 bn), Italy (-€0.7 bn), and the U.K. (-€0.5 bn) were at the other end of the table.

Fund Flows by Promoters

Amundi was the best-selling fund promoter for July overall, with net sales of €16.3 bn, ahead of BlackRock (+€12.5 bn) and JP Morgan (+€11.8 bn). It is noteworthy that the inflows of Amundi (+€13.9 bn), JP Morgan (+€9.1 bn) and BlackRock (+€5.3 bn) were impacted by flows into money market funds.

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

European Fund Flows Review, July 2020

Source: Refinitiv Lipper

Considering the single-asset classes, PIMCO (+€4.3 bn) was the best-selling promoter of bond funds, followed by BlackRock (+€3.8 bn), Aviva (+€2.3 bn), Mercer (+€1.3 bn), and Fidelity (+€1.2 bn).

Within the equity space, BlackRock (+€2.9 bn) led the table, followed by Northern Trust (+€2.1 bn), DWS Group (+€1.7 bn), Amundi (+€1.3 bn), and JP Morgan (+€1.2 bn).

NN Investment Partners (+€1.2 bn) was the leading promoter of mixed-assets funds in Europe, followed by Flossbach von Storch (+€0.7 bn), BNP Paribas Asset Management (+€0.6 bn), Vanguard Group (+€0.5 bn), and MFS Investment Management (+€0.5 bn).

Amundi (+€1.3 bn) was the leading promoter of alternative UCITS funds for the month, followed by Insight (+€0.8 bn), Jupiter (+€0.5 bn), Mercer (+€0.3 bn), and JP Morgan (+€0.2 bn).

Best-Selling Funds

The 10 best-selling long-term funds, gathered at the share class level, experienced net inflows of €8.7 bn for July. The general fund-flows trend for the 10 best-selling funds was in line with the overall fund-flows trend in Europe as bond funds dominated the ranks of asset types with regard to the 10 best-selling funds (+€3.9 bn), followed by equity funds (+€3.7 bn) and mixed assets funds (+€1.1 bn). Aviva Investors Global Sovereign Bond Zh GBP (+$1.6 bn) was the best-selling fund share class for July.

Table 2: Ten Best-Selling Long-Term Funds, July 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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