European Fund Flow Trends, March 2023

It was not surprising that March 2023 was in general a positive 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 in the near future. That said, mutual fund promoters (-€2.0 bn) faced outflows, while ETF promoters (+€13.0 bn) enjoyed inflows. The outflows from actively managed funds were driven by outflows from mixed-assets products (-€13.7 bn). Within the current market environment, it is somewhat surprising that European investors sold mixed-assets products since these products were European investors darlings in nearly all market environments in the past. More generally, long-term funds faced estimated net outflows of €23.1 bn while money market products enjoyed inflows of €34.1 bn. These flow numbers might be seen as a sign that European investors are in risk-off mode.

In more detail, money market funds (+€34.1 bn) were by far the best-selling asset type overall for March 2023. The category was followed by bond funds (+€1.6 bn), ”other” funds (+€1.1 bn), and real estate funds (+€0.7 bn). On the other side of the coin, commodities funds (-€0.1 bn), equity funds (-€6.0 bn), alternative UCITS funds (-€6.7 bn), and mixed-assets funds (-€13.7 bn) faced outflows.

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

Source: Refinitiv Lipper

The flow pattern for March drove the estimated overall net flows to €37.1 bn year to date.

Money Market Products by Lipper Global Classification

With a market share of 11.62% 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 EUR (+€18.6 bn) was the best seller within the money market segment, followed by Money Market USD (+€8.4 bn) and Money Market GBP (+€3.5 bn). At the other end of the spectrum, Money Market NOK (-€0.1 bn) suffered the highest net outflows in the money market segment, bettered by Money Market CAD (-€0.01 bn) and Money Market PLN (-€0.003 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 – March 2023 (Euro Billions)

Source: Refinitiv Lipper

Fund Flows by Lipper Global Classifications

When it comes to the overall sales for March, it was not surprising that Money Market EUR (+€18.6 bn) and Money Market USD (+€8.4 bn) dominated the table of the 10 best-selling peer groups by estimated net flows for March since money market funds enjoyed the highest inflows for the month. The two leaders were followed by Target Maturity Bond EUR 2020+ (+€4.9 bn), Money Market GBP (+€3.5 bn), and Equity Emerging Markets Global (+€2.5 bn).

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

Source: Refinitiv Lipper

On the other side of the table, Mixed Asset GBP Balanced (-€9.4 bn) faced the highest estimated net outflows for March, bettered by Equity U.S. (-€3.4 bn) and Bond Other (-€2.3 bn).

A closer look at the best- and worst-selling Lipper Global Classifications for March shows that European investors were somewhat in a risk-off mode over the course of the month. In more detail, European investors increased their positions in money market products but took also positions in somewhat riskier sectors, such as Equity Emerging Markets Global and Bond Asia Pacific in Local Currencies.

Fund Flows by Promoters

BlackRock (+€21.9 bn) was the best-selling fund promoter in Europe for March, ahead of Swisscanto (+€6.9 bn), Goldman Sachs (+€6.2 bn), BNP Paribas (+€5.0 bn), and Vanguard (+€4.1 bn). Given the product ranges of the 10-top promoters and the overall fund flow trends, it was surprising to see that ETFs didn’t play a more significant role for the positions of the leading ETF promoter in Europe.

With regard to the overall flows, it is noteworthy that the inflows for BlackRock (+€13.5 bn), Goldman Sachs (+€6.8 bn), and BNP Paribas (+€5.1 bn) were impacted by flows into money market products.

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

Source: Refinitiv Lipper

Considering the single-asset classes, M&G Investments (+€3.6 bn) was the best-selling promoter of bond funds, followed by UBS (+€3.1 bn), DWS Group (+€1.7 bn), Swisscanto (+€1.6 bn), and Vanguard (+€1.0 bn).

Within the equity space, BlackRock (+€5.5 bn) led the table, followed by Swisscanto (+€4.9 bn), Vanguard (+€2.5 bn), KBC (+€1.4 bn), and Fidelity International (+€1.2 bn).

BlackRock (+€0.9 bn) was the leading promoter of mixed-assets funds in Europe, followed by Kutxabank (+€0.8 bn), Artemis (+€0.6 bn), True Potential (+€0.4 bn), and Danske (+€0.4 bn).

BNP Paribas (+€0.2 bn) was the leading promoter of alternative UCITS funds for the month, followed by Lazard (+€0.2 bn), Banco Cooperativo (+€0.1 bn), Scor (+€0.1 bn), and AQR Capital Management (+€0.1 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 March. Nineteen of the 35 markets covered in this report showed estimated net inflows, and 16 showed net outflows. Ireland (+€23.6 bn) was the fund domicile with the highest net inflows, followed by Switzerland (+€9.4 bn), Spain (+€2.8 bn), France (+€1.4 bn), and Sweden (+€1.4 bn). On the other side of the table, the U.K. (-€13.5 bn) was the fund domicile with the highest outflows, bettered by Norway (-€8.3 bn) and Luxembourg (-€5.2 bn).

It is noteworthy that the estimated net flows for Ireland (+€18.3 bn), Luxembourg (+€8.4 bn), France (+€4.6 bn), Switzerland (+€3.1 bn), and Spain (+€1.1 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 Ireland (+2.8 bn) led the table, followed by Spain (+€2.5 bn) and Switzerland (+€0.7 bn). Bond funds domiciled in Norway (-€3.3 bn), Luxembourg (-€0.8 bn), and Denmark (-€0.4 bn) were at the other end of the table.

For equity funds, products domiciled in Switzerland (+€4.5 bn) led the table for the month, followed by Ireland (+€3.3 bn) and Belgium (+€1.2 bn). Meanwhile, the U.K. (-€5.4 bn), Norway (-€4.9 bn), and Luxembourg (-€3.4 bn) were the domiciles with the highest estimated net outflows from equity funds.

Regarding mixed-assets products, the Netherlands (+€0.4 bn) was the domicile with the highest estimated net inflows for the month, followed by Belgium (+€0.3 bn) and Sweden (+€0.2 bn). In contrast, the U.K. (-€6.3 bn), Luxembourg (-€4.6 bn), and France (-€0.8 bn) were the domiciles with the highest estimated net outflows from mixed-assets funds.

The Netherlands (+€0.1 bn) was the domicile with the highest estimated net inflows into alternative UCITS funds for the month, followed by Finland (+€0.02 bn) and Liechtenstein (+€0.01 bn). Meanwhile, Luxembourg (-€4.5 bn), Ireland (-€1.7 bn), and France (-€0.2 bn) were at the other end of the table.