January 23, 2023

Monday Morning Memo: European Fund Flow Trends, December 2022

by Detlef Glow.

Given the generally positive market environment in December 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, and increasing interest rates triggered by high inflation rates are all impacting investor expectations. 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 overall inflows for the month.

At the product level, the promoters of mutual funds (+€8.7 bn) and ETFs (+€5.5 bn) enjoyed, as expected, overall inflows.

Given the current market environment with increasing interest rates, it was still somewhat surprising that European investors bought into bond funds. At a closer look, long-term products (+€14.3 bn) enjoyed the inflows for the month, while short-term (money market) funds (-€0.003 bn) faced modest outflows for the month.

At a closer look, bond funds (+€15.8 bn) followed by equity funds (+€3.3 bn), real estate funds (+€0.2 bn), and “other” funds (+€0.2 bn) enjoyed inflows over the course of December. On the other side of the table, money market funds (-€0.03 bn), commodities funds (-€1.4 bn), mixed-assets funds (-€1.5 bn), and alternative UCITS funds (-€4.4 bn) faced outflows.

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

European fund flows, December 2022

Source: Refinitiv Lipper

The flow pattern for December drove the estimated overall net redemptions to €164.2 bn for 2022 overall.

 

Money Market Products

With a market share of 12.03% 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.

Money Market USD (+€4.6 bn) was the best seller within the money market segment, followed by Money Market Global (+€2.5 bn) and Money Market EUR (+€1.5 bn). At the other end of the spectrum, Money Market GBP (-€9.4 bn) suffered the highest net outflows in the money market segment, bettered by Money Market SGD (-€0.04 bn) and Money Market AUD (-€0.04 bn).

By looking on these numbers one needs to bear in mind that the flows in money market products are impacted by a combination of asset allocation decisions of portfolio managers and 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 – December 2022 (Euro Billions)

Source: Refinitiv Lipper

 

Fund Flows by Lipper Global Classifications

When it comes to the overall sales for December, it was not surprising that the table of the 10 best-selling peer groups by estimated net inflows for December showed a mix of all major asset types. Equity Global (+€5.6 bn) was the best-selling Lipper Global Classification for the month. It was followed by Money Market USD (+€4.6 bn), Target Maturity Bond EUR 2020+ (+€3.2 bn), Money Market Global (+€2.5 bn), and Emerging Markets Global (+€2.5 bn).

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

European fund flows, December 2022

Source: Refinitiv Lipper

On the other side of the table, Equity UK (-€2.3 bn) faced the highest estimated net outflows for December. It was bettered by Bond EUR Short Term (-€2.0 bn) and Mixed Asset EUR Conservative – Global (-€1.7 bn).

A closer look at the best- and worst-selling Lipper Global Classifications for December shows that European investors were somewhat readjusting their asset allocation. European investors selling equity funds investing in Europe was a trend that continued over the course of December, as the respective peer groups are further on the table of the 10 Lipper Global Classifications with the highest estimated outflows. The fund flows trends within the segment of long-term products might be a sign that European investors are readjusting their portfolios to the current economic situation and the outcome from the measures taken by central banks around the globe to fight high inflation rates.

 

Fund Flows by Promoters

JPMorgan (+€9.6 bn) was the best-selling fund promoter in Europe for December, ahead of Amundi (+€6.5 bn), BNP Paribas (+€6.4 bn), Natixis (+€4.6 bn), and AXA Investment Managers (+€3.5 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 in general minor but different roles for the 10 best-selling fund promoters.

Regarding the above, it is noteworthy that flows for JPMorgan (+€9.7 bn), BNP Paribas (+€6.2 bn), and Natixis (+€4.0 bn) were impacted by the flows into money market products.

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

European fund flows, December 2022 

Source: Refinitiv Lipper

Considering the single-asset classes, BlackRock (+€3.4 bn) was the best-selling promoter of bond funds, followed by Amundi (+€2.3 bn), Mercer (+€1.8 bn), Pimco (+€0.8 bn), and M&G (+€0.7 bn).

Within the equity space, Vanguard (+€1.7 bn) led the table, followed by BlackRock (+€1.3 bn), Amundi (+€1.1 bn), MGI Funds (+€0.8 bn), and Deka (+€0.8 bn).

Coutts (+€1.1 bn) was the leading promoter of mixed-assets funds in Europe, followed by AXA (+€0.4 bn), True Potential (+€0.4 bn), NN Investment Partners (+€0.4 bn), and Allianz (+€0.3 bn).

Sabadell (+€0.7 bn) was the leading promoter of alternative UCITS funds for the month, followed by Danske (+€0.5 bn), Mercer (+€0.3 bn), Insight (+€0.3 bn), and DNCA Investments (+€0.3 bn).

 

Fund Flows by Fund Domiciles

Single-fund domicile flows (including those to money market products) showed, in general, a positive picture over the course of December. Twenty-seven of the 35 markets covered in this report showed estimated net inflows, and eight showed net outflows. France (+€11.4 bn) was the fund domicile with the highest net inflows, followed by Luxembourg (+€5.6 bn), Switzerland (+€4.1 bn), Spain (+€2.2 bn), and the UK (+€1.5 bn). On the other side of the table, the UK (-€12.3 bn) was the fund domicile with the highest outflows, bettered by Luxembourg (-€8.4 bn) and Denmark (-€1.3 bn).

It is noteworthy that the estimated net flows for France (+€11.8 bn), Luxembourg (+€8.0 bn), and Switzerland (+€1.4 bn) were impacted by the flows in money market products.

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

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Ireland (+€8.3 bn) led the table, followed by Luxembourg (+€3.0 bn) and Spain (+€1.6 bn). Bond funds domiciled in Germany (-€0.8 bn), Austria (-€0.3 bn), and Belgium (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in Ireland (+€2.3 bn) led the table for the month, followed by Switzerland (+€1.6 bn) and Germany (+€1.2 bn). Meanwhile, Norway (-€0.8 bn), Luxembourg (-€0.8 bn), and the UK (-€0.5 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, the UK (+€1.0 bn) was the domicile with the highest estimated net inflows for the month, followed by Switzerland (+€0.8 bn) and the Netherlands (+€0.4 bn). In contrast, Luxembourg (-€1.9 bn), Italy (-€1.0 bn), and Germany (-€0.4 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Sweden (+€0.1 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by Spain (+€0.1 bn) and the Netherlands (+€0.04 bn). Meanwhile, Ireland (-€4.4 bn), Luxembourg (-€2.9 bn), and the UK (-€2.6 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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