December 26, 2022

Monday Morning Memo: European Fund Flow Trends, November 2022

by Detlef Glow.

Given the generally positive market environment over the course of November 2022, it was not surprising that the European fund industry enjoyed overall estimated inflows 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, increasing interest rates triggered by high and in some cases still further increasing inflation rates are all impacting the expectations of investors. Nevertheless, the estimated flows at the asset type level may indicate that European investors have shifted their positioning and are now somewhat in risk-on mode as long-term funds enjoyed alongside with money market funds overall inflows.

At the product level, the promoters of mutual funds (+€33.4 bn) and ETFs (+€14.3 bn) enjoyed, as expected, overall inflows.

Given the current market environment, it was not surprising that European investors bought into bond and equity funds. In more detail, short-term (money market) products (+€37.9 bn) enjoyed the highest inflows for the month, while long-term funds (+€9.7 bn) reversed the monthly trend over the course of November 2022.

At a closer look, money market funds (+€37.9 bn), followed by bond funds (+€8.3 bn) and equity funds (+€6.5 bn) enjoyed inflows over the course of November. On the other side of the table, “other” funds (-€0.1 bn), mixed-assets funds (-€0.4 bn), real estate funds (-€0.6 bn), commodities funds (-€0.6 bn), and alternative UCITS funds (-€3.4 bn) faced outflows.

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

European Fund Flows - November 2022

Source: Refinitiv Lipper

The flow pattern for November drove the estimated overall net redemptions to €198.6 bn year to date.

 

Fund Flows by Lipper Global Classifications

When it comes to the overall sales for November, it was not surprising that the table of the 10 best-selling peer groups by estimated net inflows for November showed a mix of all major asset types. Money Market EUR (+€38.5 bn) was the best-selling Lipper Global Classification for the month. It was followed by Equity Global (+€7.0 bn), Bond EUR Corporates (+€5.1 bn), Money Market USD (+€4.8 bn), and Target Maturity Bond EUR 2020+ (+€4.5 bn).

Graph 2: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, November 2022 (Euro Millions)

European Fund Flows - November 2022

Source: Refinitiv Lipper

On the other side of the table, Money Market GBP (-€6.5 bn) faced the highest estimated net outflows for November. It was bettered by Bond EUR Short Term (-€4.0 bn) and Bond USD (-€3.4 bn).

A closer look at the best- and worst-selling Lipper Global Classifications for November shows that European investors were further somewhat readjusting their asset allocation. European investors selling equity funds investing in Europe was a trend that continued over the course of November, as the respective peer groups are further on the table of the 10 Lipper Global Classifications with the highest estimated outflows. Even as the overall flows for November 2022 were heavily impacted by the money market segment, the flows within the segment of long-term products might be a sign that European investors are readjusting their portfolios to try to protect them against a possible negative outcome from the current economic environment and the measures taken by central banks around the globe to fight increasing inflation rates.

It is noteworthy that the estimated flows in money market sectors are not only a reflection of asset allocation decisions of investors since these products are also used by corporates as a replacement for cash accounts.

 

Fund Flows by Promoters

BlackRock (+€17.0 bn) was the best-selling fund promoter in Europe for November, ahead of JPMorgan (+€14.3 bn), Amundi (+€5.6 bn), Coutts (+€5.0 bn), and Legal & General (+€4.2 bn). Given the product ranges of the 10-top promoters and the overall fund flow trends, it was somewhat surprising to see that ETFs played different roles for the 10 best-selling fund promoters.

Graph 3: Ten Best-Selling Fund Promoters in Europe, November 2022 (Euro Millions)

Source: Refinitiv Lipper

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