September 27, 2021

Monday Morning Memo: European Fund Flow Trends, August 2021

by Detlef Glow.

European investors were further in a risk-on mode over the course of August. Given the general market environment it was no surprise that August 2021 was another positive month for the European fund industry since the promoters of mutual funds (+€63.4 bn) and ETFs (+€9.8 bn) enjoyed inflows. The overall flow pattern in Europe showed that investors continued to be in risk-on mode in August despite high inflows into money market products. In more detail, investors bought further into risky assets as long-term funds (+€59.5 bn) enjoyed the highest inflows, while money market products (+€13.8 bn) also enjoyed estimated net inflows. In line with the general flow pattern, Equity Global (+€11.3 bn) was the best-selling Lipper Global Classification for the month.

Equity funds (+€22.3 bn) were the best-selling asset type overall for the month. The category was followed by bond funds (+€19.9 bn), mixed-assets funds (+€15.7 bn), money market funds (+€13.8 bn), alternative UCITS funds (+€1.7 bn), and commodities funds (+€0.4 bn). On the other side of the table, “other” funds (-€0.2 bn) and real estate funds (-€0.3 bn) were the only asset types showing outflows.

The flow pattern for August drove the estimated overall net inflows to €475.1 bn year to date.

Graph 1: Estimated Net Flows by Asset and Product Type – August 2021 (Euro Billions)

European Fund Market Review August 2021

Source: Refinitiv Lipper

Money Market Products

With a market share of 10.04% 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. As the market environment normalized further, with the situation around the COVID-19 pandemic easing up, it was not surprising that European investors reduced their money market positions over the course of the year so far. Opposite to this, money market funds enjoyed inflows for the month (+€13.8bn). In line with their active peers (+€13.6bn), ETFs investing in money market instruments contributed estimated net inflows of €0.2 bn to the total.

Money Market Products by Lipper Global Classification

In more detail, Money Market EUR (+€8.1 bn) was the best seller within the money market segment, followed by Money Market USD (+€7.7 bn) and Money Market SEK (+€0.5 bn). At the other end of the spectrum, Money Market GBP (-€2.5 bn) suffered the highest net outflows overall, bettered by Money Market EUR Leveraged (-€0.3 bn) and Money Market SGD (-€0.1 bn).

This flow pattern revealed that European investors bought money market products denominated in the euro and USD, while selling money market products in GBP. 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)

 

Source: Refinitiv Lipper

Fund Flows by Lipper Global Classifications

With regard to the overall sales in the European fund industry for August, it was not surprising that Equity Global (+€11.3 bn) dominated the table of the 10 best-selling peer groups by estimated net flows. It was followed by Money Market EUR (+€8.1 bn), Money Market USD (+€7.7 bn), Equity Europe ex UK (+€4.8 bn), and Bond Global USD (+€3.7 bn).

Graph 3: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, August 2021 (Euro Billions)

European Fund Market Review August 2021

Source: Refinitiv Lipper

On the other side of the table, Money Market GBP (-€2.5 bn) faced the highest estimated net outflows for August, bettered by Equity UK (-€2.0 bn) and Equity Sector Information Technology (-€1.3 bn).

Fund Flows by Promoters

Unsurprisingly, the largest fund promoter in the European fund industry, BlackRock (+€7.9 bn) was the best-selling fund promoter in Europe for August, ahead of JPMorgan (+€4.3 bn), BNP Paribas Asset Management (+€3.7 bn), Vanguard (+€3.3 bn), and Man Investments (+€2.8 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 for the positions of BlackRock and DWS Group in the table of the 10 best-selling fund promoters in Europe. In addition, it is noteworthy that the overall fund flows for JPMorgan (+€2.5 bn), BlackRock (+€2.1 bn), and BNP Paribas Asset Management (+€1.9 bn), were impacted by flows in the money market segment.

Graph 4: Ten Best-Selling Fund Promoters in Europe, August 2021 (Euro Billions)

European Fund Market Review August 2021

Source: Refinitiv Lipper

Considering the single-asset classes, BlackRock (+€1.8 bn) was the best-selling promoter of bond funds, followed by Vanguard (+€1.4 bn), UBS (+€1.1 bn), Pimco (+€1.0 bn), and DWS Group (+€0.8 bn).

Within the equity space, Man Investments (+€3.6 bn) led the table, followed by BlackRock (+€3.3 bn), Vanguard (+€1.3 bn), BNP Paribas Asset Management (+€1.0 bn), and Legal & General (+€1.0 bn).

Allianz (+€1.4 bn) was the leading promoter of mixed-assets funds in Europe, followed by Union Investment (+€0.9 bn), DWS Group (+€0.7 bn), BlackRock (+€0.7 bn), and Amundi (+€0.6 bn).

Brevan Howard (+€0.5 bn) was the leading promoter of alternative UCITS funds for the month, followed by Insight (+€0.4 bn), Siemens (+€0.3 bn), DWS Group (+€0.3 bn), and Assenagon (+€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 August. Twenty-nine of the 34 markets covered in this report showed estimated net inflows, and five showed net outflows. Luxembourg (+€34.6 bn) was the fund domicile with the highest net inflows, followed by Ireland (+€17.7 bn), France (+€4.4 bn), Germany (+€3.9 bn), and Switzerland (+€3.6 bn). On the other side of the table, Jersey (-€0.5 bn) was the fund domicile with the highest outflows, bettered by Finland (-€0.1 bn) and Isle of Man (-€0.04 bn). It is noteworthy that the fund flows for Luxembourg (+€7.9 bn) and France (-€3.1 bn) were impacted by the flows within the money market segment.

Graph 5: Estimated Net Sales by Fund Domiciles, August 2021 (Euro Billions)

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Luxembourg (+€8.7 bn) led the table, followed by Ireland (+€6.8 bn), Switzerland (+€1.5 bn), France (+€1.2 bn), and the Netherlands (+€0.6 bn). Bond funds domiciled in Belgium (-€0.1 bn), the UK (-€0.1 bn), and Italy (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in Luxembourg (+€9.0 bn) led the table for the month, followed by Ireland (+€8.6 bn), the UK (+€1.9 bn), Germany (+€1.4 bn), and Belgium (+€0.8 bn). Meanwhile, Finland (-€0.3 bn), the Netherlands (-€0.2 bn), and Austria (-€0.1 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, Luxembourg (+€7.3 bn) was the domicile with the highest estimated net inflows, followed by the UK (+€1.6 bn), Switzerland (+€1.3 bn), Germany (+€1.1 bn), and Ireland (+€1.0 bn). In contrast, Jersey (-€0.1 bn), Liechtenstein (-€0.02 bn), and the Isle of Man (-€0.02 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 the month, followed by Germany (+€0.5 bn) and Guernsey (+€0.5 bn). Meanwhile, France (-€0.4 bn), Italy (-€0.1 bn), and the UK (-€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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