February 26, 2023

Monday Morning Memo: European Fund Flow Trends, January 2023

by Detlef Glow.

The European fund industry enjoyed inflows over the course of January 2023 as the markets were further recovering. The generally positive market trend was driven by expectations of a possible end of the monetary policy tightening cycle by central banks around the globe and better than expected economic growth in the major economies, which would fuel company earnings.

That said, the promoters of mutual funds (+€17.7 bn) and the promoters of ETFs (+€18.9 bn) enjoyed inflows. Within this market environment, it was not surprising that European investors sold money market products since these products are considered safe-haven investments. Therefore, one could say that European investors are in risk-on mode.

As a result, the overall fund flow numbers are heavily impacted by the high outflows from money market products (-€16.3 bn). Conversely, long-term funds enjoyed estimated overall net inflows of €52.9 bn within this market environment. Nevertheless, it looks like European investors are no longer seeing rising interest rates—caused by the increased inflation rates around the globe—as a major risk, since bond products were the best-selling asset type for the month.

At a closer look, bond funds (+€32.1 bn) were the best-selling asset type overall for January 2023. The category was followed by equity funds (+€26.4 bn), real estate funds (+€0.5 bn), and “other” funds (+€0.1 bn). On the other side of the coin, commodities funds (-€0.4 bn), mixed-assets funds (-€2.4 bn), alternative UCITS funds (-€3.4 bn), and money market funds (-€16.3 bn) faced outflows for the month.

Graph 1: Estimated Net Flows by Asset and Product Type – January 2023 (in bn EUR)

European Fund Flow Report - January 2023

Source: Refinitiv Lipper


Money Market Products

With a market share of 11.49% 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 (+€2.2 bn) was the best seller within the money market segment, followed by Money Market NOK (+€0.5 bn) and Money Market AUD (+€0.1 bn). At the other end of the spectrum, Money Market GBP (-€17.8 bn) suffered the highest net outflows in the money market segment, bettered by Money Market EUR (-€0.7 bn) and Money Market EUR Leveraged (-€0.3 bn).

When looking at 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 – January 2023 (Euro Billions)

Source: Refinitiv Lipper

The high outflows from Money Market GBP might be an outcome from the LDI crisis in the U.K. in October 2022, as investors may have started to return to long-term assets. The recovery of bond and equity markets has released some risk budget which can now be used by investors for additional investments in riskier assets such as bonds or equities.


Fund Flows by Lipper Global Classifications

As for overall sales for January, it was not surprising that Equity Global (+€9.7 bn) dominated the table of the 10 best-selling peer groups by estimated net flows for the month since funds from this classification have been somewhat in favor with European investors for awhile now. It was followed by Target Maturity Bond EUR 2020+ (+€5.0 bn), Equity Emerging Markets Global (+€5.0 bn), Bond EUR Corporates (+€4.8 bn), and Bond Global USD (+€4.3 bn).

Graph 3: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, January 2023 (Euro Millions)

European Fund Flow Report - January 2023

Source: Refinitiv Lipper

On the other side of the table, Money Market GBP (-€17.8 bn) faced the highest estimated net outflows for January, bettered by Bond EUR Short Term (-€3.1 bn) and Mixed Asset EUR Flexible-Global (-€1.6 bn).

A closer look at the best- and worst-selling Lipper Global Classifications for January shows that European investors were in risk-on mode despite the still looming recessionary risks.


Fund Flows by Promoters

JPMorgan (+€9.1 bn) was the best-selling fund promoter in Europe for January, ahead of BNP Paribas (+€6.3 bn), Amundi (+€4.0 bn), State Street Global Advisors (+€3.8 bn), and HSBC (+€3.7 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 in terms of fund distribution success of the respective promoters in Europe.

It is noteworthy that the overall fund flows for JPMorgan (+€6.7 bn), BNP Paribas (+€6.4 bn), Amundi (+€3.6 bn), State Street Global Advisors (+€2.3 bn), and HSBC (+€2.7 bn) were impacted by flows into money market products.

Graph 4: Ten Best-Selling Fund Promoters in Europe, January 2023 (Euro Millions)

European Fund Flow Report - January 2023

Source: Refinitiv Lipper

Considering the single-asset classes, BlackRock (+€5.9 bn) was the best-selling promoter of bond funds, followed by KBC (+€3.2 bn), PIMCO (+€2.7 bn), La Caixa (+€2.0 bn), and Vanguard (+€1.2 bn).

Within the equity space, BlackRock (+€8.6 bn) led the table, followed by UBS (+€2.5 bn), DWS Group (+€2.0 bn), AllianceBernstein (+€1.7 bn), and JPMorgan (+€1.6 bn).

BlackRock (+€0.7 bn) was the leading promoter of mixed-assets funds in Europe, followed by AXA (+€0.6 bn), Allianz (+€0.5 bn), True Potential (+€0.3 bn), and Caja Laboral (+€0.2 bn).

Ruffer (+€0.5 bn) was the leading promoter of alternative UCITS funds for the month, followed by Banco Cooperativo (+€0.3 bn), AQR Capital Management (+€0.3 bn), Insight (+€0.3 bn), and Aviva (+€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 January. Twenty of the 35 markets covered in this report showed estimated net inflows, and 15 showed net outflows. Luxembourg (+€17.3 bn) was the fund domicile with the highest net inflows, followed by France (+€8.2 bn), Switzerland (+€6.5 bn), the UK (+€6.1 bn), and Spain (+€3.5 bn). On the other side of the table, Ireland (-€11.8 bn) was the fund domicile with the highest outflows, bettered by Belgium (-€1.5 bn) and Italy (-€1.2 bn).

Graph 5: Estimated Net Sales by Fund Domiciles, January 2023 (Euro Billions)

Source: Refinitiv Lipper


This article is for information purposes only and does not constitute any investment advice.

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




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