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November 13, 2023

Monday Morning Memo:  European Fund Industry Review: Year-to-Date SFDR Snapshot – Q3 2023

by Detlef Glow.

Assets Under Management by SFDR Article

The assets under management in the European fund industry increased from (+€13,313.1 bn) at the end of 2022 to (+€13,722.4 bn) at the end of September 2023, despite an unstable overall market environment. The increase in assets under management of €409.2 bn was mainly driven by positive developments in the underlying markets (+€341.3 bn), while the estimated net inflows over the course of the year so far contributed €67.9 bn to the growth in assets under management.

Article 8 products were the product category with the highest assets under management (€6,155.5 bn), followed by article 6 products (€4,932.9 bn), non-reporting products (€2,301.4 bn), and article 9 products (€332.6 bn).

Graph 1: Market Share of Assets Under Management by SFDR Article (September 30, 2023)

Quarterly Review of SFDR AUM and Flows - Q3 2023

Source: LSEG Lipper

 

Fund Flows by SFDR Article

Article 6 products (+€76.7 bn) enjoyed the highest estimated net inflows over the course of the year 2023 so far. It was followed by non-reporting products (+€32.8 bn) and article 9 products (+€4.0 bn). Article 8 products (-€53.5 bn) were the only category which faced estimated net outflows over the course of 2023 so far.

Graph 2: Cumulated Estimated Fund Flows by SFDR Article (January 1, 2023 – September 30, 2023)

Quarterly Review of SFDR AUM and Flows - Q3 2023

Source: LSEG Lipper

The outflows from article 8 products needs to be seen in conjunction with overall fund flow trends in the European fund industry, since the largest product category is obviously the most impacted by the overall trend. Therefore, it is noteworthy to acknowledge that actively managed mutual funds (ex-money market products) faced outflows of €106.8 bn over the course of 2023 so far, while ETFs (+€97.8 bn) and index tracking mutual funds (+€32.2 bn) enjoyed inflows into long-term products. Since passive products have seen a massive cut back on their SFDR assignments after the publication of the Regulatory Technical Standards (RTS) in Q4 2022, it is not surprising that article 6 products enjoyed the highest inflows for the year 2023 so far.

A closer look at the estimated fund flows by assigned SFDR article unveils that the majority of outflows from article 8 products (-€36.3 bn) occurred over the course of Q3 2023. Article 9 products also had shy outflows (-€0.4 bn) over the same period. As said before, these fund flow numbers need to be seen in conjunction with the wider fund flow trends in the European fund industry. As for this, it is noteworthy that actively managed long-term products faced outflows over the course of Q3 2023, while passive long-term products enjoyed healthy inflows.

Graph 3: Monthly Estimated Net Flows by SFDR Article (July 1, 2023 – September 30, 2023)

Quarterly Review of SFDR AUM and Flows - Q3 2023

Source: LSEG Lipper

 

To learn more about the fund flow trends in the European fund industry, please refer to our European Fund Flow Trends Report.

The views expressed are the views of the author, not necessarily those of Thomson Reuters Lipper.

 

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