by Detlef Glow.
European investors were further in a risk-on mode over the course of July even as the situation with regard to the COVID-19 pandemic in Europe started to worsen over the course of the month. Nevertheless, it was no surprise that July 2021 was another positive month for the European fund industry since the promoters of mutual funds (+€92.9 bn) and ETFs (+€11.6 bn) enjoyed inflows. The overall flow pattern in Europe showed that investors continued to be in risk-on mode in July despite high inflows into money market products. In more detail, investors bought further into risky assets as long-term funds (+€61.2 bn) enjoyed the highest inflows. In addition, money market products (+€43.3 bn) enjoyed estimated net inflows. In line with the general flow pattern, Money Market EUR (+€39.0 bn) was the best-selling classification for the month.
Money market funds (+€43.3 bn) were the best-selling asset type overall for the month. The category was followed by bond funds (+€23.2bn), equity funds (+€18.9 bn), mixed-assets funds (+€15.0 bn), alternative UCITS funds (+€3.4 bn), “other” funds (+€0.5 bn), and commodities funds (+€0.4 bn). On the other side of the table, real estate funds (-€0.1 bn) was the only asset type showing outflows.
Graph 1: Estimated Net Flows by Asset and Product Type – July 2021 (Euro Billions)
Money Market Products
With a market share of 10.08% of the overall assets under management in the European fund management industry, money market products are the fourth largest asset type. Therefore, it is worthwhile to briefly review the trends in this market segment. Money market funds were the best-selling asset type for the month (+€43.3bn). In line with their active peers (+€43.2bn), ETFs investing in money market instruments contributed estimated net inflows of €0.1 bn to the total.
Money Market Products by Lipper Global Classification (LGC)
In more detail, Money Market EUR (+€39.0 bn) was the best seller within the money market segment and the best-selling Lipper classification overall, followed by Money Market GBP (+€9.6 bn) and Money Market Global (+€1.3 bn). At the other end of the spectrum, Money Market USD (-€8.0 bn) suffered the highest net outflows overall and was the only Lipper Global Classification in the money market which faced outflows for the month.
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.
Graph 2: Estimated Net Flows in Money Market Products by LGC – June 2021 (Euro Billions)
Fund Flows by Lipper Global Classifications
With regard to the overall sales for July, it was not surprising that Money Market EUR (+€39.0 bn) dominated the table of the 10 best-selling peer groups by estimated net flows. It was followed by Equity Global (+€16.9 bn), Money Market GBP (+€9.6 bn), Bond Global Short Term (+€5.5 bn), and Bond Global EUR (+€3.2 bn).
Graph 3: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, July 2021 (Euro Billions)
Source: Refinitiv Lipper
On the other side of the table, Money Market USD (-€8.0 bn) faced the highest estimated net outflows for July, bettered by Bond Global Corporates USD (-€2.7 bn) and Bond USD (-€1.8 bn).
Fund Flows by Promoters
Amundi (+€10.3 bn) was the best-selling fund promoter in Europe for July, ahead of BlackRock (+€9.3 bn), BNP Paribas Asset Management (+€5.5 bn), SPW (+€4.2 bn), and DWS Group (+€4.1 bn). Given the product ranges of the top five promoters and the overall fund flow trends, it was not surprising to see that ETFs played a vital role only for BlackRock, DWS Group, and HSBC in the success of the five best-selling fund promoters in Europe.
Graph 4: Ten Best-Selling Fund Promoters in Europe, July 2021 (Euro Billions)
Considering the single-asset classes, Amundi (+€4.1 bn) was the best-selling promoter of bond funds, followed by BlackRock (+€3.0 bn), Swisscanto (+€2.0 bn), UBS (+€2.0 bn), and DWS Group (+€1.8 bn).
Within the equity space, SPW (+€4.1 bn) led the table, followed by BlackRock (+€3.7 bn), Capital Group (+€1.8 bn), Deka (+€0.9 bn), and abrdn (+€0.9 bn).
Allianz Global Investors (+€1.4 bn) was the leading promoter of mixed-assets funds in Europe, followed by DWS Group (+€1.0 bn),Union Investment (+€1.0 bn), Flossbach von Storch (+€0.6 bn), and Vanguard (+€0.6 bn).
DWS Group (+€0.7 bn) was the leading promoter of alternative UCITS funds for the month, followed by Man Investments (+€0.5 bn), Credit Suisse (+€0.4 bn), Royal London (+€0.3 bn), and Aegon Asset Management (+€0.3 bn).
Fund Flows by Fund Domiciles
Single-fund domicile flows (including those to money market products) showed, in general, a positive picture during July. Twenty-seven of the 34 markets covered in this report showed estimated net inflows, and seven showed net outflows. France (+€32.3 bn) was the fund domicile with the highest net inflows, followed by Luxembourg (+€23.8 bn), Ireland (+€21.0 bn), the UK (+€8.3 bn), and Switzerland (+€4.5 bn). On the other side of the table, Jersey (-€0.2 bn) was the fund domicile with the highest outflows, bettered by Guernsey (-€0.1 bn) and the Isle of Man (-€0.1 bn). It is noteworthy that the fund flows for France (+€28.3 bn), Luxembourg (+€6.5 bn), and Ireland (+€6.3 bn) were impacted by the flows within the money market segment.
Graph 5: Estimated Net Sales by Fund Domiciles, July 2021 (Euro Billions)
Within the bond sector, funds domiciled in France (+€6.1 bn) led the table, followed by Ireland (+€5.6 bn), Luxembourg (+€5.2 bn), Switzerland (+€2.7 bn), and Sweden (+€1.0 bn). Bond funds domiciled in Guernsey (-€0.5 bn), Poland (-€0.2 bn), and Austria (-€0.2 bn) were at the other end of the table.
For equity funds, products domiciled in Ireland (+€7.1 bn) led the table, followed by the UK (+€6.4 bn), Luxembourg (+€2.1 bn), Sweden (+€1.4 bn), and Germany (+€1.3 bn). Meanwhile, France (-€0.7 bn), Jersey (-€0.1 bn), and Liechtenstein (-€0.1 bn) were the domiciles with the highest estimated net outflows from equity funds.
Regarding mixed-assets products, Luxembourg (+€7.2 bn) was the domicile with the highest estimated net inflows for the month, followed by Spain (+€1.9 bn), the UK (+€1.6 bn), Germany (+€1.0 bn), and Italy (+€0.6 bn). In contrast, Denmark (-€2.4 bn), Liechtenstein (-€0.9 bn), and Jersey (-€0.3 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.
Luxembourg (+€2.9 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by Ireland (+€1.8 bn) and Germany (+€0.1 bn). Meanwhile, France (-€0.6 bn), Spain (-€0.3 bn), and the UK (-€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.