November 23, 2020

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

by Detlef Glow.

October 2020 was another positive month for the European fund industry since the promoters of mutual funds (+€69.2 bn) enjoyed inflows. Meanwhile, the market environment turned negative as the second wave of the COVID-19 pandemic hit major markets in Europe and investors feared a second coronavirus lockdown-induced economic downturn. Despite these fears, investors bought into risk assets as long-term funds enjoyed estimated net inflows of €51.9 bn while money market products had estimated inflows of €17.8 bn.

As a result, long-term mutual funds posted overall net inflows for the month. Equity funds (+€30.4 bn) were the best-selling asset type overall for October 2020. The category was followed by money market funds (+€17.8 bn), bond funds (+€17.4 bn), real estate funds (+€1.8 bn), mixed-assets funds (+€1.5 bn), “other” funds (+€1.5 bn), and commodities funds (+€1.1 bn). On the other side of the table, alternative UCITS funds were the only asset type facing estimated net outflows (-€1.7 bn) over the course of October.

These fund flows added up to overall estimated net inflows of €51.9 bn into long-term investment funds for October. ETFs contributed inflows of €4.7 bn to these flows.  

Money Market Products

As the current market environment is still somewhat fragile, European investors put money into money market products. As a result, money market funds were the asset type with the second highest inflows for the month (+€17.8bn). In line with their actively managed peers, ETFs investing in money market instruments contributed estimated net inflows of €0.1 bn to the total.

This flow pattern led to estimated overall net inflows of €69.6 bn for October and overall estimated inflows of €376.5 bn year to date.

Money Market Products by Sector

Money Market EUR (+€22.0 bn) was the best seller within the money market segment, followed by Money Market GBP (+€3.5 bn) and Money Market Global (+€0.5 bn). At the other end of the spectrum, Money Market USD (-€8.5 bn) suffered the highest net outflows overall, bettered by Money Market AUD (-€0.1 bn) and Money Market EUR Leveraged (-€0.02 bn).

Comparing this flow pattern with the flow pattern for September revealed that European investors sold further amounts of the U.S. dollar while buying back into the pound sterling and building up their position in the euro further. 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, October 2020 (Euro Billions)

European Fund Flows Review, October 2020

Source: Refinitiv Lipper

Fund Flows by Sectors

Equity Global (+€9.0 bn) was once again the best-selling sector in the segment of long-term mutual funds, followed by Equity UK (+€7.7 bn). Equity US (+€6.4 bn) was the third best-selling long-term sector, followed by Bond Global EUR (+€3.1 bn) and Equity China (+€2.6 bn).

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

European Fund Flows Review, October 2020

Source: Refinitiv Lipper

At the other end of the spectrum, Alternative Multi Strategies (-€1.9 bn) suffered the highest net outflows in the segment of long-term funds, bettered by Bond Eur Corporates (-€1.9 bn), Alternative Global Macro (-€1.2 bn), Equity Eurozone (-€1.1 bn), and Equity Global Income (-€0.9 bn).

Graph 3: Ten Bottom Sectors, October 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 October. Twenty-two of the 34 markets covered in this report showed estimated net inflows, and 12 showed net outflows. France (+€20.6 bn) was the fund domicile with the highest net inflows, followed by the U.K. (+€20.4 bn), Ireland (+€14.4 bn), Switzerland (+€5.5 bn), and Luxembourg (+€5.2 bn). On the other side of the table, Italy (-€1.5 bn) was the fund domicile with the highest outflows, bettered by Belgium (-€0.6 bn) and the Isle of Man (-€0.1 bn). It is noteworthy that the fund flows for France (+€21.9 bn) and Luxembourg (-€7.7 bn) were impacted by flows in the money market segment.

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

European Fund Flows Review, October 2020

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Luxembourg (+€8.8 bn) led the table, followed by Ireland (+€3.7 bn), Switzerland (+€1.7 bn), the Netherlands (+€1.1 bn), and the U.K. (+€1.0 bn). Bond funds domiciled in Finland (-€0.5 bn), Denmark (-€0.2 bn), and Jersey (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in the U.K. (+€17.1 bn) led the table by far, followed by Luxembourg (+€6.7 bn), Ireland (+€5.3 bn), the Netherlands (+€1.5 bn), and Finland (+€0.4 bn). Meanwhile, Denmark (-€0.6 bn), Germany (-€0.2 bn), and Jersey (-€0.2 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, Switzerland (+€2.4 bn) was the domicile with the highest estimated net inflows for October, followed by the U.K. (+€2.2 bn), the Netherlands (+€1.4 bn), Denmark (+€1.1 bn), and Ireland (+€0.4 bn). In contrast, Luxembourg (-€4.1 bn), Italy (-€1.0 bn), and Spain (-€0.6 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Luxembourg (+€1.6 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for October, followed by Ireland (+€0.6 bn), Spain (+€0.1 bn), Liechtenstein (+€0.04 bn), and Sweden (+€0.01 bn). Meanwhile, France (-€2.6 bn), Italy (-€0.6 bn), and the U.K. (-€0.2 bn) were at the other end of the table.

Fund Flows by Promoters

BlackRock (+€16.0 bn) was the best-selling fund promoter in Europe for October, ahead of Aviva (+€6.2 bn), DWS Group (+€4.6 bn), BNP Paribas Asset Management (+€4.2 bn), and AXA (+€4.2 bn). It is noteworthy that the inflows of Aviva (+€5.1 bn) and BNP Paribas Asset Management (+€3.2 bn) were impacted by flows into money market funds.

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

Source: Refinitiv Lipper

Considering the single-asset classes, BlackRock (+€2.6 bn) was the best-selling promoter of bond funds, followed by Eurizon Capital (+€1.5 bn), AXA (+€1.1 bn), ASR Bank (+€1.1 bn), and Fidelity International (+€0.9 bn).

Within the equity space, BlackRock (+€2.6 bn) led the table, followed by ASR Bank (+€1.4 bn), JPMorgan (+€1.1 bn), Capital Group (+€1.0 bn), and Morgan Stanley (+€1.0 bn).

ING (+€1.4 bn) was the leading promoter of mixed-assets funds in Europe, followed by Vontobel (+€1.2 bn), Danske (+€1.2 bn), Swisscanto (+€0.8 bn), and Flossbach von Storch (+€0.6 bn).

Wellington Management (+€0.4 bn) was the leading promoter of alternative UCITS funds for the month, followed by BlackRock (+€0.4 bn), Pictet (+€0.3 bn), PIMCO (+€0.3 bn), and Nordea (+€0.2 bn).

Best-Selling Funds

The 10 best-selling long-term funds, gathered at the share class level, experienced net inflows of €23.6 bn for October. The general fund-flows trend for the 10 best-selling funds was in line with the overall fund-flows trend in Europe as equity funds dominated the ranks of asset types with regard to the 10 best-selling funds by far (+€21.2 bn), followed by bond funds (+€1.4 bn) and mixed-assets funds (+€1.0 bn). BlackRock ACS US Equity Tracker X1 GBP Acc (+€8.6 bn) was the best-selling fund share class for October.

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

Source: Refinitiv Lipper

 

Refinitiv Lipper delivers data on more than 330,000 collective investments in 113 countries. Find out more.

 

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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