Our Privacy Statment & Cookie Policy

All LSEG websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.

March 27, 2023

Monday Morning Memo: European Fund Flow Trends, February 2023

by Detlef Glow.

It was somewhat surprising that February 2023 was in general a negative month for the European fund industry given the rather positive revisions of the economic outlooks for the major economies globally and a possible end of the interest hiking cycle of central banks. That said, mutual fund promoters (-€18.2 bn) faced outflows, while ETFs promoters (+€8.1 bn) enjoyed inflows. The outflows from actively managed funds were driven by outflows from money market products (-€18.8 bn). Within the current market environment, it is not surprising that European investors sold money market products since these products are considered as so-called safe-haven investments. Conversely, long-term funds enjoyed estimated net inflows of €9.0 bn. These flow numbers might be seen as a sign that European investors are in risk-on mode.

In more detail, bond funds (+€13.7 bn) were by far the best-selling asset type overall for February 2023. The category was followed by equity funds (+€5.7 bn) and ”other” funds (+€0.3 bn). On the other side of the coin, commodities funds (-€0.1 bn), real estate funds (-€0.5 bn), alternative UCITS funds (-€2.0 bn), mixed-assets funds (-€8.2 bn), and money market funds (-€19.1 bn) faced outflows.

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

European Fund Flow Trends - February 2023

Source: Refinitiv Lipper

The flow pattern for February drove the estimated overall net flows to €24.1 bn year to date.

 

Money Market Products by Lipper Global Classification

With a market share of 11.47% 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 (+€11.5 bn) was the best seller within the money market segment, followed by Money Market CHF (+€0.6 bn) and Money Market NOK (+€0.3 bn). At the other end of the spectrum, Money Market EUR (-€15.3 bn) suffered the highest net outflows in the money market segment, bettered by Money Market GBP (-€15.2 bn) and Money Market EUR Leveraged (-€0.4 bn).

With regard to the flow in money market products it is noteworthy that these flows 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 – February 2023 (Euro Billions)

Source: Refinitiv Lipper

 

Fund Flows by Lipper Global Classifications

When it comes to the overall sales for February, it was surprising that Money Market USD (+€11.5 bn) dominated the table of the 10 best-selling peer groups by estimated net flows for February since money market funds faced overall outflows for the month. It was followed by Equity Global (+€8.1 bn), Equity Emerging Markets Global (+€6.2 bn), Target Maturity Bond 2020+ (+€4.5 bn), and Bond Global USD (+€3.2 bn).

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

European Fund Flow Trends - February 2023 

Source: Refinitiv Lipper

On the other side of the table, Money Market EUR (-€15.3 bn) faced the highest estimated net outflows for February, bettered by Money Market GBP (-€15.2 bn) and Mixed Asset GBP Balanced (-€5.4 bn).

A closer look at the best- and worst-selling Lipper Global Classifications for February shows that European investors were in a risk-on mode over the course of the month. In more detail, European investors took positions in somewhat riskier sectors, such as Bond EUR Corporates or Equity China, beside new positions in sectors that may offer diversification for their portfolio such as global bonds or equities.

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

Morgan Stanley (+€5.1 bn) was the best-selling fund promoter in Europe for February, ahead of JPMorgan (+€4.9 bn), UBS (+€3.1 bn), HSBC (+€2.5 bn), and State Street Global Advisors (+€2.0 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 significant role for UBS, HSBC, State Street Global Advisors, and Vanguard in terms of fund distribution success of the respective promoters in Europe.

With regard to the overall flow pattern, it is noteworthy that the flows for Morgan Stanley (+€5.3 bn), JPMorgan (+€4.9 bn), UBS (+€2.2 bn), and HSBC (+€1.4 bn), were impact by inflows into money market products.

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

European Fund Flow Trends - February 2023 

Source: Refinitiv Lipper

Considering the single-asset classes, PIMCO (+€1.6 bn) was the best-selling promoter of bond funds, followed by La Caixa (+€1.4 bn), BlackRock (+€1.0 bn), AllianceBernstein (+€1.0 bn), and Vanguard (+€0.9 bn).

Within the equity space, BlackRock (+€2.7 bn) led the table, followed by DWS Group (+€1.7 bn), Union Investment (+€1.3 bn), KBC (+€1.3 bn), and HSBC (+€1.2 bn).

BlackRock (+€0.7 bn) was the leading promoter of mixed-assets funds in Europe, followed by Allianz (+€0.4 bn), Investment Fund Services (+€0.3 bn), True Potential (+€0.3 bn), and BMO Global Asset Management (+€0.2 bn).

Mercer (+€0.6 bn) was the leading promoter of alternative UCITS funds for the month, followed by Brevan Howard (+€0.5 bn), Sabadell (+€0.5 bn), AQR Capital Management (+€0.3 bn), and TCW Funds (+€0.2 bn).

 

Fund Flows by Fund Domiciles

Despite the overall outflows in the European fund industry, the single-fund domicile flows (including those to money market products) showed, in general, a positive picture over the course of February. Twenty-two of the 35 markets covered in this report showed estimated net inflows, and 13 showed net outflows. Luxembourg (+€3.8 bn) was the fund domicile with the highest net inflows, followed by Switzerland (+€3.5 bn), Spain (+€3.1 bn), Denmark (+€2.7 bn), and Germany (+€2.2 bn). On the other side of the table, France (-€15.2 bn) was the fund domicile with the highest outflows, bettered by Ireland (-€13.5 bn) and Norway (-€1.3 bn).

It is noteworthy that the estimated net flows for Luxembourg (+€4.8 bn), Ireland (-€15.2 bn), and France (-€6.1 bn), were impacted by the flows in money market products.

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

Source: Refinitiv Lipper

Within the bond sector, funds domiciled in Spain (+45.1 bn) led the table, followed by Ireland (+€3.5 bn) and Switzerland (+€1.8 bn). Bond funds domiciled in Norway (-€1.6 bn), France (-€0.2 bn), and Austria (-€0.1 bn) were at the other end of the table.

For equity funds, products domiciled in Ireland (+€3.6 bn) led the table for the month, followed by Luxembourg (+€2.5 bn) and Germany (+€2.0 bn). Meanwhile, France (-€6.2 bn), the UK (-€1.7 bn), and Spain (-€0.5 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, the U.K. (+€1.5 bn) was the domicile with the highest estimated net inflows for the month, followed by Switzerland (+€0.3 bn) and the Netherlands (+€0.3 bn). In contrast, Ireland (-€5.3 bn), France (-€2.3 bn), and Luxembourg (-€2.1 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

Guernsey (+€0.4 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by Spain (+€0.2 bn) and the Netherlands (+€0.1 bn). Meanwhile, Luxembourg (-€2.4 bn), France (-€0.2 bn), and Ireland (-€0.1 bn) were at the other end of the table.

 

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.

Get In Touch

Subscribe

Related Reports

In this issue of LSEG Lipper’s Global Mutual Funds & Exchange-Traded Products ...

In this issue of LSEG Lipper’s Swiss Mutual Funds & Exchange-Traded Products ...

The European ETF industry has written a true success story since its inception in the ...

As a professional market observer, you know that the marketing departments are sometimes ...

We have updated our Privacy Statement. Before you continue, please read our new Privacy Statement and familiarize yourself with the terms.x