August 21, 2022

Monday Morning Memo: European Fund Flow Trends, July 2022

by Detlef Glow.

Given the positive market environment over the course of July 2022, it was somewhat surprising that the European fund industry faced outflows over the course of the month. That said, one needs to bear in mind that the geopolitical situation in Europe, the still ongoing COVID-19 pandemic, disrupted delivery chains, an increasing inflation and increasing interest rates are impacting the expectations of the investors. The promoters of mutual funds (-€41.2 bn) and ETFs (-€0.4 bn) faced outflows. The outflows from ETFs were the first outflows from these products since March 2020.

With regard to accelerating rise of inflation rates and various other economic uncertainties, it is not surprising that funds from all asset types faced outflows. In more detail, money market products (-€0.1 bn) and long-term funds (-€41.6 bn) faced outflows over the course of July 2022.

At a closer look, money market funds (-€0.1 bn) were the asset type with the lowest outflows over the course of July 2022. They were followed by “other” funds (-€2.2 bn), real estate funds (-€2.2 bn), mixed-assets funds (-€2.4 bn), alternative UCITS funds (-€3.9 bn), commodities funds (-€4.5 bn), bond funds (-€6.5 bn), and equity funds (-€19.9 bn).

Graph 1: Estimated Net Flows by Asset and Product Type – July 2022 (in bn EUR)

European Fund Flow Trends, July 2022

Source: Refinitiv Lipper

 

Money Market Products

With a market share of 10.35% of the overall assets under management in the European fund management industry, money market products are the fourth largest asset type. Therefore, it is worth briefly reviewing the trends in this market segment. Given the current geopolitical situation and increasing inflation rates which may require further actions from central banks and governments around the globe it was somewhat surprising that European investors only slightly decreased their money market positions (-€0.1 bn) over the course of July, since money market products are considered as safe-haven investments. Opposite to their active peers (+€0.3 bn), ETFs investing in money market instruments contributed estimated net outflows of €0.4 bn to the total.

Money Market Products by Lipper Global Classification

In more detail, Money Market GBP (+€2.6 bn) was the best seller within the money market segment, followed by Money Market CHF (+€0.3 bn) and Money Market NOK (+€0.3 bn). At the other end of the spectrum, Money Market EUR (-€2.4 bn) suffered the highest net outflows, bettered by Money Market USD (-€1.1 bn) and Money Market AUD (-€0.03 bn).

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 – July 2022 (Euro Billions)

Source: Refinitiv Lipper

 

Fund Flows by Lipper Global Classifications

When it comes to the overall sales for July, it was somewhat surprising that bond and money market classifications were within the 10 best-selling peer groups by estimated net flows for July, given the overall market environment. Bond USD Government (+€2.6 bn) was the best-selling Lipper Global Classification for the month. It was followed by Money Market GBP (+€2.6 bn), Equity China (+€2.1 bn), Bond EUR Corporates (+€1.8 bn), and Bond EMU Government (+€1.7 bn).

Graph 3: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, July 2022 (Euro Millions)

European Fund Flow Trends, July 2022

Source: Refinitiv Lipper

On the other side of the table, Equity Europe (-€4.6 bn) faced the highest estimated net outflows for July. It was bettered by Commodity Blended (-€4.5 bn) and Money Market EUR (-€2.4 bn).

A closer look at the best- and worst-selling Lipper Global Classifications for July shows that European investors were somewhat readjusting their asset allocation as they sold bond funds from riskier classifications and equity funds investing in Europe while buying government bond funds. The flows for July 2022 might be sign that European investors are attempting to protect their portfolios against the possible outcome from the current economic environment and the measures taken by central banks around the globe to fight increasing inflation rates.

 

Fund Flows by Promoters

abrdn (+€2.6 bn) was the best-selling fund promoter in Europe for July, ahead of State Street Global Advisors (+€2.5 bn), Legal & General (+€2.5 bn), Federated Hermes (+€1.8 bn), and Swisscanto (+€1.7 bn). Given the product ranges of the 10-top promoters and the overall fund flow trends, it was surprising to see that ETFs played only a minor role for the largest fund promoters in Europe within the list of the 10 best-selling fund promoters.

Graph 4: Ten Best-Selling Fund Promoters in Europe, July 2022 (Euro Millions)

European Fund Flow Trends, July 2022

Source: Refinitiv Lipper

Considering the single-asset classes, M&G (+€5.9 bn) was the best-selling promoter of bond funds, followed by La Caixa (+€5.4 bn), Aviva (+€2.8 bn), Swisscanto (+€2.5 bn), and UBS (+€2.3 bn).

Within the equity space, Eurizon Asset Management (+€1.6 bn) led the table, followed by Swisscanto (+€1.0 bn), Deka (+€0.5 bn), Candriam (+€0.5 bn), and La Caixa (+€0.5 bn).

Allianz (+€6.1 bn) was the leading promoter of mixed-assets funds in Europe, followed by Swisscanto (+€3.5 bn), Union Investment (+€3.2 bn), True Potential (+€3.1 bn), and Vanguard (+€2.9 bn).

Lumyna (+€4.3 bn) was the leading promoter of alternative UCITS funds for the month, followed by DNCA (+€1.9 bn), Schroders (+€1.8 bn), Gresham House (+€1.4 bn), and Brevan Howard (+€1.1 bn).

 

Fund Flows by Fund Domiciles

Single-fund domicile flows (including those to money market products) showed, in general, a positive picture during April. Nineteen of the 35 markets covered in this report showed estimated net inflows, and 16 showed net outflows. Ireland (+€4.1 bn) was the fund domicile with the highest net inflows, followed by Switzerland (+€1.3 bn), Norway (+€0.5 bn), Spain (+€0.4 bn), and Sweden (+€0.4 bn). On the other side of the table, Luxembourg (-€24.9 bn) was the fund domicile with the highest outflows, bettered by France (-€16.8 bn) and the UK (-€3.5 bn).

It is noteworthy that the estimated net flows for Ireland (+€14.7 bn), the UK (+€1.9 bn), Luxembourg (-€2.0 bn) and France (-€14.9 bn) were impacted by the flows in money market products.

 

Graph 5: Estimated Net Sales by Fund Domiciles, July 2022 (Euro Billions)

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Spain (+€2.1 bn) led the table, followed by Switzerland (+€1.1 bn) and the UK (+€0.6 bn). Bond funds domiciled in Luxembourg (-€6.8 bn), Ireland (-€4.4 bn), and Germany (-€0.3 bn) were at the other end of the table.

For equity funds, products domiciled in Switzerland (+€1.1 bn) led the table for the month, followed by Norway

(+€0.3 bn), Liechtenstein (+€0.1 bn), Spain (+€0.1 bn), and Italy (+€0.1 bn). Meanwhile, Luxembourg (-€9.3 bn), the UK (-€5.2 bn), and Ireland (-€2.2 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, Sweden (+€0.3 bn) was the domicile with the highest estimated net inflows, followed by the UK (+€0.3 bn), Belgium (+€0.2 bn), Switzerland (+€0.2 bn), and the Netherlands (+€0.2 bn). In contrast, Luxembourg (-€1.5 bn), France (-€0.5 bn), and Italy (-€0.5 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Denmark (+€0.1 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by the Netherlands (+€0.04 bn) and Switzerland (+€0.03 bn). Meanwhile, Luxembourg (-€2.7 bn), France (-€0.5 bn), and Ireland (-€0.3 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 or LSEG.

 

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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