by Detlef Glow.
European investors were in a mixed mood over the course of April, even as the situation with regard to the COVID-19 pandemic in Europe has been easing up. Nevertheless, April 2021 was another positive month for the European fund industry since the promoters of mutual funds (+€69.9 bn) and ETFs (+€16.6 bn) enjoyed inflows. The overall flow pattern in Europe has further normalized as investors in Europe continued to be in risk-on mode in April. In more detail, investors bought further into risky assets as long-term funds (€79.6 bn) and money market products (€7.0 bn) enjoyed estimated net inflows. As opposed to the general flow pattern, Money Market EUR (€18.2 bn) was the best-selling classification for the month.
Equity funds (+€35.6 bn) were once again by far the best-selling asset type overall for the month. The category was followed by bond funds (+€22.5bn), mixed-assets funds (+€15.7 bn), money market funds (+€7.0 bn), alternative UCITS funds (+€6.4 bn), commodities funds (+€0.8 bn), and real estate funds (+€0.2 bn). On the other side of the table, “other” funds (-€1.6 bn) was the only asset type showing outflows.
Graph 1: Estimated Net Flows by Asset and Product Type – April 2021 (in bn EUR)
Source: Refinitiv Lipper
Money Market Products
As the current market environment is still somewhat fragile, it was not surprising that European investors bought money market products. As a result, money market funds enjoyed inflows for the month (+€7.0bn). Unlike their active peers (+€7.1bn), ETFs investing in money market instruments contributed estimated net outflows of €0.1 bn to the total.
Money Market Products by Sector
In more detail, Money Market EUR (+€18.2 bn) was the best seller within the money market segment and the best-selling Lipper classification overall, followed by Money Market Global (+€0.7 bn) and Money Market EUR Leveraged (+€0.2 bn). At the other end of the spectrum, Money Market GBP (-€8.5 bn) suffered the highest net outflows overall, bettered by Money Market USD (-€3.5 bn) and Money Market SEK (-€0.2 bn).
This flow pattern revealed that European investors sold money market products in foreign currencies and bought further back into the euro. In conjunction with the asset allocation decisions of portfolio managers, these shifts in the money market segment 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.
Fund Flows by Lipper Global Classifications
With regard to the overall sales for April, it was surprising that Money Market EUR (+€18.2 bn) dominated the table of the 10 best-selling peer groups by estimated net flows. It was followed by Equity Global (+€17.2 bn), Mixed Asset EUR Bal – Global (+€3.5 bn), Mixed Asset EUR Flex – Global (+€3.4 bn), and Absolute Return Bond EUR (+€3.0 bn).
Graph 2: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, April 2021 (Euro Millions)
Source: Refinitiv Lipper
On the other side of the table, Money Market GBP (-€8.5 bn) faced the highest estimated net outflows for April, bettered by Money Market USD (-€3.5 bn) and Equity Eurozone (-€1.8 bn).
Fund Flows by Promoters
BlackRock (+€20.2 bn) was the best-selling fund promoter in Europe for April, ahead of Amundi (+€6.2 bn), BNP Paribas Asset Management (+€5.2 bn), AXA (+€4.6 bn), and Vanguard Group (+€4.4 bn). It was not surprising to see that ETFs played a vital role for only BlackRock and Vanguard Group in the success of the five best-selling fund promoters in Europe given their product ranges and overall fund-flow trends. In addition, it is noteworthy that the inflows for BlackRock (+€6.1 bn), AXA (+€4.7 bn), BNP Paribas Asset Management (+€3.2 bn), and Amundi (+€2.5 bn) were impacted by flows in money market products.
Graph 3: Ten Best-Selling Fund Promoters in Europe, April 2021 (Euro Millions)
Source: Refinitiv Lipper
Considering the single-asset classes, BlackRock (+€4.6 bn) was the best-selling promoter of bond funds, followed by BNP Paribas Asset Management (+€1.8 bn), UBS (+€1.7 bn), Schroders (+€1.1 bn), and Vanguard Group (+€1.0 bn).
Within the equity space, BlackRock (+€8.9 bn) led the table, followed by Vanguard Group (+€2.3 bn), Baillie Gifford (+€2.0 bn), Capital Group (+€1.5 bn), and Schroders (+€1.3 bn).
Vanguard Group (+€1.2 bn) was the leading promoter of mixed-assets funds in Europe, followed by Allianz (+€1.1 bn), DWS Group (+€0.9 bn), Union Investment (+€0.7 bn), and BlackRock (+€0.6 bn).
Amundi (+€3.1 bn) was the leading promoter of alternative UCITS funds for the month, followed by DWS Group (+€0.5 bn), Pictet (+€0.5 bn), Pimco (+€0.5 bn), and Mercer (+€0.4 bn).
Fund Flows by Fund Domiciles
Single-fund domicile flows (including those to money market products) showed, in general, a positive picture during January. Twenty-eight of the 34 markets covered in this report showed estimated net inflows, and six showed net outflows. Luxembourg (+€28.8 bn) was the fund domicile with the highest net inflows, followed by Ireland (+€21.3 bn), France (+€18.3 bn), the UK (+€8.0 bn), and Germany (+€3.2 bn). On the other side of the table, Jersey (-€1.7 bn) was the fund domicile with the highest outflows, bettered by Italy (-€0.6 bn) and Isle of Man (-€0.1 bn). It is noteworthy that the fund flows for France were impacted by flows in the money market segment (+€15.5 bn).
Graph 4: Estimated Net Sales by Fund Domiciles, April 2021 (Euro Billions)
Source: Refinitiv Lipper
Within the bond sector, funds domiciled in Ireland (+€10.4 bn) led the table, followed by Luxembourg (+€6.8 bn), France (+€1.5 bn), the UK (+€1.4 bn), and Switzerland (+€1.2 bn). Bond funds domiciled in Germany (-€0.2 bn), Sweden (-€0.1 bn), and Italy (-€0.1 bn) were at the other end of the table.
For equity funds, products domiciled in Luxembourg (+€16.4 bn) led the table, followed by Ireland (+€12.7 bn), the UK (+€4.5 bn), Sweden (+€1.7 bn), and Germany (+€1.6 bn). Meanwhile, Switzerland (-€2.2 bn), France (-€1.5 bn), and Italy (-€0.3 bn) were the domiciles with the highest estimated net outflows from equity funds.
Regarding mixed-assets products, Luxembourg (+€5.0 bn) was the domicile with the highest estimated net inflows for April, followed by the UK (+€3.4 bn), Spain (+€1.4 bn), Germany (+€1.0 bn), and Belgium (+€0.7 bn). In contrast, Jersey (-€0.03 bn), Poland (-€0.02 bn), and Isle of Man (-€0.01 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.
Luxembourg (+€2.7 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for April, followed by France (+€2.6 bn) and Ireland (+€1.9 bn). Meanwhile, Italy (-€0.3 bn), the UK (-€0.2 bn), and Guernsey (-€0.2 bn) were at the other end of the table.
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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.