November 22, 2021

Monday Morning Memo: European Fund Flow Trends, October 2021

by Detlef Glow.

Inflows into money market products boosted the fund flows for October 2021, while European investors were in general further in a risk-on mode over the course of the month. Given the general market environment it was no surprise that October 2021 was a positive month for the European fund industry since mutual fund (+€105.5 bn) and ETF (+€10.6 bn) promoters enjoyed inflows. The overall flow pattern in Europe showed that investors continued to be in risk-on mode in October even as the general flow pattern was driven by inflows into money market products. In more detail, investors bought further into risky assets as long-term funds (+€49.2 bn) and money market products (+€66.9 bn) enjoyed estimated net inflows. In line with this, Money Market EUR (+€47.0 bn) was the best-selling Lipper Global Classification for the month.

In more detail, money market funds (+€66.9 bn) were the best-selling asset type overall for the month. The category was followed by equity funds (+€24.4 bn), mixed-assets funds (+€15.7 bn), bond funds (+€8.9 bn), real estate funds (+€1.4 bn), and commodities funds (+€0.01 bn). On the other side of the table, “other” funds (-€0.6 bn) and alternative UCITS funds (-€0.6 bn), were the only asset types showing outflows.

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

Review of the European Fund Industry, October 2021

Source: Refinitiv Lipper

The flow pattern for October drove the estimated overall net inflows to €590.5 bn year to date.

 

Money Market Products

With a market share of 10.12% 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. Conversely, money market funds enjoyed high inflows for the month (+€66.9 bn) even as the volatility in the securities market decreased. In contrast with their active peers (+€67.0bn), ETFs investing in money market instruments contributed estimated net outflows of €0.1 bn to the total.

 

Money Market Products by Lipper Global Classification

In more detail, Money Market EUR (+€47.0 bn) was the best seller within the money market segment, followed by Money Market USD (+€11.8 bn) and Money Market GBP (+€7.5 bn). At the other end of the spectrum, Money Market SEK (-€0.2 bn) suffered the highest net outflows overall, bettered by Money Market CHF (-€0.1 bn) and Money Market JPY (-€0.01 bn).

This flow pattern revealed that European investors bought money market products denominated in the euro, USD, and GBP. These inflows over the course of October came in after even higher outflows from money market products over the course of September 2021 and are therefore not considered as a sign that European investors started to be in a risk-off mode. 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 – October 2021 (Euro Billions)

Source: Refinitiv Lipper

 

Fund Flows by Lipper Global Classifications

With regard to the overall sales for October, it was not surprising that Money Market EUR (+€47.0 bn) dominated the table of the 10 best-selling peer groups by estimated net flows. It was followed by Equity Global (+€12.9 bn), Money Market USD (+€11.8 bn), Money Market GBP (+€7.5 bn), and Equity US (+€3.8 bn).

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

Review of the European Fund Industry, October 2021

Source: Refinitiv Lipper

On the other side of the table, you can see European investors reduced their risk exposure in the bond sector as Bond Emerging Markets Global LC (-€1.5 bn) faced the highest estimated net outflows for October, bettered by Bond Emerging Markets Global HC (-€1.4 bn) and Equity UK (-€1.1 bn).

 

Fund Flows by Promoters

BlackRock (+€18.3 bn) was once again the best-selling fund promoter in Europe for October, ahead of Amundi (+€12.5 bn), JPMorgan (+€9.7 bn), Legal & General (+€7.1 bn), and BNP Paribas (+€7.1 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 for the position of BlackRock in the table of the 10 best-selling fund promoters in Europe for the month.

In addition, it is noteworthy that the estimated net flows for BlackRock (+€10.1 bn), Amundi (+€10.1 bn), JPMorgan (+€8.6 bn), Legal & General (+€4.6 bn), and BNP Paribas (+€6.2 bn) were impacted by inflows into money market products.

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

Source: Refinitiv Lipper

Considering the single-asset classes, Swisscanto (+€1.1 bn) was the best-selling promoter of bond funds, followed by BlackRock (+€0.8 bn), Vanguard (+€0.8 bn), HSBC (+€0.7 bn), and Amundi (+€0.6 bn).

Within the equity space, BlackRock (+€7.5 bn) led the table, followed by LGT Group (+€2.0 bn), Legal & General (+€1.9 bn), Deka (+€1.4 bn), and Amundi (+€1.2 bn).

Allianz (+€1.3 bn) was the leading promoter of mixed-assets funds in Europe, followed by Union Investment (+€0.9 bn), Fidelity International (+€0.7 bn), Amundi (+€0.6 bn), and Legal & General (+€0.6 bn).

Aegon Asset Management (+€0.3 bn) was the leading promoter of alternative UCITS funds for the month, followed by Nordea (+€0.3 bn), Alkimis (+€0.2 bn), Kepler (+€0.2 bn), and Schroders (+€0.2 bn).

 

Fund Flows by Fund Domiciles

Single-fund domicile flows (including those to money market products) showed, in general, a positive picture during September. Twenty-five of the 34 markets covered in this report showed estimated net inflows, and nine showed net outflows. Ireland (+€34.8 bn) was the fund domicile with the highest net inflows, followed by France (+€32.4 bn), Luxembourg (+€28.0 bn), Germany (+€3.7 bn), and the UK (+€3.7 bn). On the other side of the table, Guernsey (-€0.4 bn) was the fund domicile with the highest outflows, bettered by Poland (-€0.1 bn) and Jersey (-€0.1 bn). It is noteworthy that the fund flows for Ireland (+€26.9 bn), France (+€30.7 bn), and Luxembourg (+€9.6 bn) were impacted by inflows into the money market segment.

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

Review of the European Fund Industry, October 2021

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Luxembourg (+€3.2 bn) led the table, followed by France (+€1.9 bn), Switzerland (+€1.5 bn), the Netherlands (+€0.9 bn), and Sweden (+€0.8 bn). Bond funds domiciled in Italy (-€0.4 bn), Denmark (-€0.1 bn), and Austria (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in Luxembourg (+€9.6 bn) led the table for the month, followed by Ireland (+€7.5 bn), Liechtenstein (+€2.0 bn), Germany (+€1.6 bn), and the UK (+€1.6 bn). Meanwhile, Belgium (-€0.3 bn), France (-€0.2 bn), and Guernsey (-€0.2 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, Luxembourg (+€5.5 bn) was the domicile with the highest estimated net inflows, followed by the UK (+€2.2 bn), Spain (+€1.9 bn), Germany (+€1.3 bn), and Italy (+€0.7 bn). In contrast, Guernsey (-€0.2 bn), Jersey (-€0.04 bn), and Andorra (-€0.02 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Sweden (+€0.3 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by Germany (+€0.2 bn) and Liechtenstein (+€0.2 bn). Meanwhile, the UK (-€0.6 bn), Belgium (-€0.2 bn), and Spain (-€0.1 bn) were at the other end of the table.

 

The views expressed are the views of the author, not necessarily those of Refinitiv.

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