January 25, 2021

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

by Detlef Glow.

Despite the deteriorating situation with regard to the COVID-19 pandemic, December 2020 was another positive month for the European fund industry since the promoters of mutual funds (+€99.1 bn) and ETFs (+€23.5 bn) enjoyed inflows. The high level of inflows was surprising since there were some uncertainties around the outcome of the presidential election in the US and a possible hard Brexit. In addition, investors fear a second coronavirus lockdown-induced economic downturn in Europe. Despite these fears, investors bought into risky assets as long-term funds enjoyed estimated net inflows of €90.6 bn, while money market products had estimated inflows of €31.7 bn.

Equity funds (+€58.9 bn) were by far the best-selling asset type overall for December 2020. The category was followed by bond funds (+€25.1 bn) and mixed-assets funds (+€8.3 bn). On the other side of the coin, alternative UCITS funds (-€0.8 bn) faced the highest outflows for the month, bettered by real estate funds (-€0.7 bn), commodities funds (-€0.1 bn), and “other” funds (-€0.1 bn).

These fund flows added up to overall estimated net inflows of €90.6 bn into long-term investment funds for December. ETFs contributed inflows of €23.1 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 third highest inflows for the month (+€31.7bn). In line with their active peers, ETFs investing in money market instruments contributed estimated net inflows of €0.2 bn to the total.

This flow pattern led to estimated overall net inflows of €122.4 bn for December and overall estimated inflows of €574.3 bn for the year 2020.

Money Market Products by Sector

Money Market EUR (+€12.7 bn) was the best seller within the money market segment, followed by Money Market USD (+€10.7 bn) and Money Market GBP (+€9.5 bn). At the other end of the spectrum, Money Market Global (-€1.0 bn) suffered the highest net outflows in the money market segment, bettered by Money Market AUD (-€0.4 bn) and Money Market SGD (-€0.2 bn).

Comparing this flow pattern with the flow pattern for November revealed that European investors built further positions in the euro and the pound sterling while buying back into the US dollar. 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, December 2020 (Euro Billions)

Review of the European fund industry, December 2020

Source: Refinitiv Lipper

Fund Flows by Sectors

Equity Global (+€21.4 bn) was once again the best-selling sector in the segment of long-term mutual funds, far ahead of Equity US (+€6.9 bn). Equity Emerging Markets Global (+€6.4 bn) was the third best-selling long-term sector, followed by Bond Global USD (+€4.4 bn) and Equity Sector Information Technology (+€4.2 bn).

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

Source: Refinitiv Lipper

At the other end of the spectrum, Real Estate Switzerland (-€1.5 bn) suffered the highest net outflows in the segment of long-term funds, bettered by Bond GBP Short Term (-€1.4 bn), Equity UK (-€1.4 bn), Bond EUR Corporates(-€1.2 bn), and Alternative Multi Strategy (-€1.1 bn).

Graph 3: Ten Bottom Sectors, December 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 December. Twenty-five of the 34 markets covered in this report showed estimated net inflows, and nine showed net outflows. Ireland (+€64.8 bn) was the fund domicile with the highest net inflows, followed by Luxembourg (+€36.9 bn), Germany (+€5.9 bn), Sweden (+€4.2 bn), and the UK. (+€4.2 bn). On the other side of the table, the Netherlands (-€4.5 bn) was the fund domicile with the highest outflows, bettered by Jersey (-€0.2 bn) and the Isle of Man (-€0.1 bn). It is noteworthy that the fund flows for Ireland (+€30.6 bn) were impacted by flows in the money market segment.

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

Review of the European fund industry, December 2020

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Ireland (+€9.6 bn) led the table, followed by Luxembourg (+€8.1 bn), Switzerland (+€3.0 bn), the UK (+€1.1 bn), and Spain (+€0.7 bn). Bond funds domiciled in Austria (-€0.1 bn), Slovakia (-€0.01 bn), and the Isle of Man (-€0.01 bn) were at the other end of the table.

For equity funds, products domiciled in Luxembourg (+€24.7 bn) led the table, followed by Ireland (+€22.9 bn), Sweden (+€3.2 bn), Germany (+€2.9 bn), and Belgium (+€2.6 bn). Meanwhile, the Netherlands (-€1.0 bn), Switzerland (-€0.7 bn), and Slovakia (-€0.1 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, the UK (+€2.5 bn) was the domicile with the highest estimated net inflows for December, followed by Luxembourg (+€2.4 bn), Germany (+€1.7 bn), Ireland (+€0.8 bn), and Switzerland (+€0.8 bn). In contrast, the Netherlands (-€3.4 bn), Jersey (-€0.04 bn), and the Isle of Man (-€0.01 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Ireland (+€0.9 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for December, followed by Germany (+€0.1 bn) and Guernsey (+€0.1 bn). Meanwhile, Luxembourg (-€0.9 bn), France (-€0.6 bn), and Italy (-€0.2 bn) were at the other end of the table.

Fund Flows by Promoters

BlackRock (+€28.4 bn) was the best-selling fund promoter in Europe for December, ahead of Amundi (+€9.0 bn), BNP Paribas Asset Management (+€6.3 bn), BNY Mellon (+€4.9 bn), and Goldman Sachs (+€4.3 bn). It is noteworthy that the inflows of BlackRock (+€7.3 bn), Amundi (+€6.2 bn), BNP Paribas (+€5.2 bn), BNY Mellon (+€4.6 bn) and Goldman Sachs (+€3.8 bn) were impacted by flows into money market funds.

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

Review of the European fund industry, December 2020

Source: Refinitiv Lipper

Considering the single-asset classes, BlackRock (+€4.7 bn) was the best-selling promoter of bond funds, followed by AXA (+€2.8 bn), JPMorgan (+€1.3 bn), PIMCO (+€1.1 bn), and Fidelity International (+€1.1 bn).

Within the equity space, BlackRock (+€16.5 bn) led the table, followed by HSBC (+€2.5 bn), Vanguard Group (+€2.1 bn), Amundi (+€2.1 bn), and Morgan Stanley (+€2.0 bn).

Vanguard Group (+€0.7 bn) was the leading promoter of mixed-assets funds in Europe, followed by Union Investment (+€0.7 bn), Flossbach von Storch (+€0.7 bn), PIMCO (+€0.5 bn), and DWS Group (+€0.5 bn).

Man Investments (+€0.3 bn) was the leading promoter of alternative UCITS funds for the month, followed by Credit Suisse Group (+€0.3 bn), Mercer (+€0.3 bn), GAM (+€0.3 bn), and BMO (+€0.2 bn).

Best-Selling Funds

The 10 best-selling long-term funds, gathered at the share class level, experienced net inflows of €9.7 bn for December. 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 (+€7.1 bn), followed by bond funds (+€2.6 bn). AXA VF – Bonds Global Aggregate T (+€1.6 bn) was the best-selling fund share class for December.

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