June 21, 2021

Monday Morning Memo: European Fund Flow Trends, May 2021

by Detlef Glow.

European investors were in a mixed mood over the course of May, even as the COVID-19 pandemic in Europe has continued easing up further. Within this environment, May 2021 was another positive month for the European fund industry since promoters of mutual funds (+€19.9 bn) and ETFs (+€12.7 bn) enjoyed inflows. The overall flow pattern in Europe showed that investors continued to be in risk-on mode in May. In more detail, investors bought further into risky assets such as long-term funds (+€38.4 bn), while money market products (-€5.8 bn) faced estimated net outflows. In line with the general flow pattern, Equity Global (+€6.3 bn) was the best-selling classification for the month.

Mixed-assets funds (+€15.1 bn) were the best-selling asset type overall for the month. The category was followed by bond funds (+€12.8bn), equity funds (+€9.8 bn), commodities funds (+€0.8 bn), and real estate funds (+€0.3 bn). On the other side of the table, “other” funds (-€0.3 bn), alternative UCITS funds (-€0.3 bn), and money market funds (-€5.8 bn) were the asset types showing outflows.

Graph 1: Estimated Net Flows by Asset and Product Type – May 2021 (in bn EUR)

European fund industry review - May 2021

Source: Refinitiv Lipper

Money Market Products

The market environment normalized further as the COVID-19 pandemic was brought increasingly under control. In light of this, it was not surprising that European investors sold money market products. As a result, money market funds faced outflows for the month (-€5.8bn). Unlike their active peers (-€5.9bn), ETFs investing in money market instruments contributed estimated net inflows of €0.1 bn to the total.

Money Market Products by Sector

In more detail, Money Market GBP (+€2.8 bn) was the best seller within the money market segment and the best-selling Lipper classification overall, followed by Money Market USD (+€2.1 bn) and Money Market Global (+€0.3 bn). At the other end of the spectrum, Money Market EUR (-€10.4 bn) suffered the highest net outflows overall, bettered by Money Market EUR Leveraged (-€0.4 bn) and Money Market CHF (-€0.2 bn).

This flow pattern revealed that European investors sold money market products denominated in the euro, while buying back into foreign currencies. 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.

European Fund Flows by Lipper Global Classifications

With regard to the overall sales for May, it was not surprising that Equity Global (+€6.3 bn) dominated the table of the 10 best-selling peer groups by estimated net flows. It was followed by Mixed Asset EUR Flexible – Global (+€3.3 bn), Mixed Asset EUR Balanced – Global (+€3.2 bn), Money Market GBP (+€2.8 bn), and Bond Global EUR (+€2.7 bn).

Graph 2: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, May 2021 (Euro Millions)

European fund industry review - May 2021

Source: Refinitiv Lipper

On the other side of the table, Money Market EUR (-€10.4 bn) faced the highest estimated net outflows for May, bettered by Absolute Return Bond EUR (-€2.2 bn) and Equity UK (-€1.1 bn).

European Fund Flows by Promoters

BlackRock (+€13.0 bn) was the best-selling fund promoter in Europe for May, ahead of Fidelity International (+€2.3 bn), Union Investment (+€2.2 bn), Morgan Stanley (+€2.1 bn), and DWS Group (+€2.1 bn). Given the product ranges of the five-top promoters and the overall fund flow trends, it was not surprising to see that ETFs played a vital role only for BlackRock and DWS Group in the success of the five best-selling fund promoters in Europe. In addition, it is noteworthy that the flows BlackRock (+€6.6 bn), Fidelity International (+€1.0 bn), Morgan Stanley (+€2.7 bn), and Groupama (+€1.4 bn), have been impacted by inflows into money market products.

Graph 3: Ten Best-Selling Fund Promoters in Europe, May 2021 (Euro Millions)

European fund industry review - May 2021

Source: Refinitiv Lipper

Considering the single-asset classes, BlackRock (+€1.6 bn) was the best-selling promoter of bond funds, followed by UBS (+€1.4 bn), BNP Paribas Asset Management (+€1.0 bn), Mercer (+€0.8 bn), and Eurizon Asset Management (+€0.7 bn).

Within the equity space, BlackRock (+€4.1 bn) led the table, followed by Capital Group (+€1.6 bn), DWS Group (+€1.5 bn), Union Investment (+€1.2 bn), and Fidelity International (+€1.0 bn).

Allianz (+€1.0 bn) was the leading promoter of mixed-assets funds in Europe, followed by Union Investment (+€0.9 bn), Societe Generale (+€0.8 bn), Vanguard Group (+€0.6 bn), and DWS Group (+€0.6 bn).

Mercer (+€0.4 bn) was the leading promoter of alternative UCITS funds for the month, followed by DWS Group (+€0.3 bn), Nordea (+€0.2 bn), JPMorgan (+€0.2 bn), and Maitland (+€0.2 bn).

European Fund Flows by Fund Domiciles

Single-fund domicile flows (including those to money market products) showed, in general, a positive picture during May. Twenty-three of the 34 markets covered in this report showed estimated net inflows, and 11 showed net outflows. Ireland (+€28.5 bn) was the fund domicile with the highest net inflows, followed by Luxembourg (+€14.4 bn), Switzerland (+€3.7 bn), Germany (+€3.7 bn), and Spain (+€2.5 bn). On the other side of the table, France (-€12.4 bn) was the fund domicile with the highest outflows, bettered by the UK (-€1.0 bn) and Denmark (-€0.7 bn). It is noteworthy that the fund flows for France were impacted by outflows from the money market segment (-€11.6 bn).

Graph 4: Estimated Net Sales by Fund Domiciles, April 2021 (Euro Billions)

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Ireland (+€4.9 bn) led the table, followed by Luxembourg (+€3.1 bn), Switzerland (+€1.8 bn), France (+€1.1 bn), and Belgium (+€0.9 bn). Bond funds domiciled in Denmark (-€0.2 bn), Italy (-€0.2 bn), and Austria (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in Luxembourg (+€7.8 bn) led the table, followed by Ireland (+€3.6 bn), Germany (+€1.4 bn), Spain (+€0.4 bn), and Italy (+€0.3 bn). Meanwhile, the UK (-€1.7 bn), Belgium (-€0.6 bn), and Denmark (-€0.5 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 May, followed by Switzerland (+€1.8 bn), France (+€1.6 bn), Spain (+€1.4 bn), and the UK (+€1.2 bn). In contrast, Jersey (-€0.1 bn), Finland (-€0.02 bn), and Isle of Man (-€0.02 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Luxembourg (+€1.8 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for May, followed by Ireland (+€1.0 bn) and the UK (+€0.4 bn). Meanwhile, France (-€3.2 bn), Italy (-€0.3 bn), and Belgium (-€0.1 bn) were at the other end of the table.

 

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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