Despite the deteriorating situation with regard to the COVID-19 pandemic and the sluggish market environment, it was not surprising that January 2022 was in general a negative month for the European fund industry. That said, the promoters of mutual funds (-€38.0 bn) faced outflows, while the promoters of ETFs (+€25.6 bn) enjoyed inflows. Within this market environment and given the economic uncertainties, it is somewhat surprising that European investors sold money market products, which are normally considered as safe haven investments. As a result, the overall fund flow numbers are heavily impacted by the high outflows from money market products (-€56.3 bn). This means that long-term funds enjoyed estimated net inflows of €43.9 bn within this market environment. Nevertheless, it looks like European investors are taking rising interest rates, caused by the increased inflations rates around the globe, into consideration as they sold bond products.
In more detail, equity funds (+€38.6 bn) were by far the best-selling asset type overall for January 2022. The category was followed by mixed-assets funds (+€5.0 bn), alternative UCITS funds (+€5.0 bn), real estate funds (+€2.0 bn), commodities funds (+€1.0 bn), and “other” funds (-€0.1 bn). On the other side of the coin, money market funds (-€56.5 bn) faced the highest outflows for the month, bettered by bond funds (-€10.5 bn).
Graph 1: Estimated Net Flows by Asset and Product Type – January 2022 (in bn EUR)
Source: Refinitiv Lipper
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. As the market environment gets more volatile, with the increasing inflation rates and the general situation around the COVID-19 pandemic, it was surprising that European investors decreased their money market positions over the course of January 2022. Money market funds faced high outflows for the month (-€56.3 bn). In contrast with their active peers (-€56.5 bn), 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 SEK (+€0.2 bn) was the best seller within the money market segment, followed by Money Market NOK (+€0.2 bn) and Money Market SGD (+€0.04 bn). At the other end of the spectrum, Money Market EUR (-€23.2 bn) suffered the highest net outflows overall, bettered by Money Market USD (-€20.7 bn) and Money Market GBP (-€12.0 bn).
This flow pattern revealed that European investors sold money market products denominated in the euro, USD, and GBP. Money market products enjoyed high inflows over the course of October and November after high outflows from money market products over the course of September 2021. These flows might be seen as a sign that European investors continued to be in a risk-on mode despite the rougher market conditions. 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 – January 2022 (Euro Billions)
Source: Refinitiv Lipper
Fund Flows by Lipper Global Classifications
With regard to the overall sales for January, it was not surprising that Equity Global (+€22.2 bn) dominated the table of the 10 best-selling peer groups by estimated net flows for January since funds from this classification have been somewhat in favor with European investors for a while now. It was followed by Mixed Asset EUR Balanced – Global (+€5.0 bn), Equity Sector Financials (+€3.3 bn), Equity US (+€3.3 bn), and Equity Europe (+€3.2 bn).
Graph 3: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, January 2022 (Euro Millions)
Source: Refinitiv Lipper
On the other side of the table, Money Market EUR (-€23.2 bn) faced the highest estimated net outflows for January, bettered by Money Market USD (-€20.7 bn) and Money Market GBP (-€12.0 bn).
A closer look at the best- and worst-selling Lipper Global Classifications for January shows that European investors were still in a risk-on mode despite the challenging market environment. In more detail, European investors took positions in sectors that may offer diversification for their portfolio such as global equities, or which may participate from increasing interest rates like Equity Sector Financials or the general shift towards the so-called value investments like income strategies.
Fund Flows by Promoters
BlackRock (+€10.0 bn) was the best-selling fund promoter in Europe for January, ahead of Lumyna (+€4.7 bn), Vanguard (+€3.0 bn), AXA (+€2.8 bn), and DWS Group (+€2.7 bn). Given the product ranges of the 10-top promoters and the overall fund flow trends, it was not surprising to see that ETFs played a major role for BlackRock, Vanguard, and DWS Group in terms of fund distribution success of the respective promoters in Europe.
Graph 4: Ten Best-Selling Fund Promoters in Europe, January 2022 (Euro Millions)
Source: Refinitiv Lipper
Considering the single-asset classes, BlackRock (+€1.3 bn) was the best-selling promoter of bond funds for the month, followed by KBC (+€1.0 bn), Invesco (+€0.9 bn), Mercer (+€0.7 bn), and Aviva (+€0.7 bn).
Within the equity space, BlackRock (+€12.7 bn) led the table, followed by UBS (+€4.5 bn), DWS Group (+€2.6 bn), Vanguard (+€2.4 bn), and Amundi (+€2.1 bn).
Allianz (+€2.2 bn) was the leading promoter of mixed-assets funds in Europe, followed by Union Investment (+€1.4 bn), AXA (+€1.1 bn), BlackRock (+€0.9 bn), and DWS Group (+€0.9 bn).
Lumyna (+€4.4 bn) was the leading promoter of alternative UCITS funds for the month, followed by Wellington Management (+€1.5 bn), DWS Group (+€0.4 bn), Pimco (+€0.2 bn), and Syquant Capital (+€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 January. Twenty-one of the 34 markets covered in this report showed estimated net inflows, and 13 showed net outflows. Switzerland (+€10.5 bn) was the fund domicile with the highest net inflows, followed by Germany (+€7.2 bn), Belgium (+€2.2 bn), the Netherlands (+€1.2 bn), and Denmark (+€0.7 bn). On the other side of the table, France (-€12.4 bn) was the fund domicile with the highest outflows, bettered by Luxembourg (-€12.3 bn) and Ireland (-€8.5 bn). It is noteworthy that the fund flows for Ireland (-€25.4 bn), Luxembourg (-€17.9 bn), and France (-€12.2 bn) were impacted by outflows from money market products.
Graph 5: Estimated Net Sales by Fund Domiciles, January 2022 (Euro Billions)
Source: Refinitiv Lipper
Within the bond sector, funds domiciled in Switzerland (+€2.6 bn) led the table, followed by the UK (+€1.4 bn), France (+€1.1 bn), the Netherlands (+€0.9 bn), and Belgium (+€0.6 bn). Bond funds domiciled in Luxembourg (-€13.0 bn), Spain (-€0.7 bn), and Denmark (-€0.5 bn) were at the other end of the table.
For equity funds, products domiciled in Ireland (+€16.6 bn) led the table for the month, followed by Switzerland (+€5.3 bn), Luxembourg (+€5.2 bn), Germany (+€3.2 bn), and the UK (+€2.6 bn). Meanwhile, France (-€0.7 bn), Sweden (-€0.5 bn), and Finland (-€0.01 bn) were the domiciles with the highest estimated net outflows from equity funds.
Regarding mixed-assets products, Luxembourg (+€7.0 bn) was the domicile with the highest estimated net inflows, followed by Germany (+€2.2 bn), Switzerland (+€2.1 bn), Belgium (+€1.0 bn), and Italy (+€0.5 bn). In contrast, the UK (-€7.8 bn), Spain (-€1.1 bn), and France (-€0.3 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.
Luxembourg (+€6.1 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by Germany (+€0.2 bn) and Sweden (+€0.03 bn). Meanwhile, Ireland (-€0.3 bn), the Netherlands (-€0.2 bn), and France (-€0.2 bn) were at the other end of the table.
