October 13, 2014

European investors become risk cautious in August

by Detlef Glow

REUTERS/Issei Kato

REUTERS/Issei Kato

Overall fund flows in August slowed after strong inflows into mutual funds in July. Nevertheless, the European mutual fund industry enjoyed overall net inflows of €18.5 bn into long-term mutual funds for August. Once again, the majority of these flows were gathered by bond funds (+€11.5 bn), followed by mixed-asset products (+€7.5 bn). These two asset types outpaced all other types of long-term funds. The third best asset type in terms of net flows, property funds, saw inflows of  €0.7 bn, while equity funds saw shy inflows of around €0.3 bn and commodity funds (+€0.02 bn) stood near the zero line. On the other side, alternative/hedge funds (-€0.5 bn) and funds from the “other” peer group (-€1.0 bn) suffered net outflows.


Money Market Products

Along with long-term mutual funds money market products enjoyed net inflows for August, with money market funds gathering €9.6 bn while enhanced money market funds faced outflows of €0.5 bn. Money market products’ inflows drove the overall net flows for August up to €27.7 bn.

Once again money market EUR (+€7.8 bn) and money market GBP (+€4.0 bn) saw the highest net inflows for August of all the fund categories covered in the FundFile database. On the other hand, money market USD suffered the highest net outflows (-€2.6 bn) in this category. This showed once again how European investors use money market products in their active asset allocation.

Graph 1: Estimated Net Sales, August 2014 (Euro Millions)

14-10-13 Flows by Asset Type

Source: Lipper FundFile

 Fund Flows by Sectors

With regard to long-term funds, asset allocation products (+€3.8 bn) were once again the best selling asset class, followed by bonds flexible (+€2.7 bn) and bonds global currencies (+€2.6 bn) as well as bonds EUR (+€2.5 bn) and equities Pacific ex Japan (+€2.2 bn). At the other end of the spectrum bonds USD corporate high yield once again suffered net outflows (-€2.8 bn), bettered by bonds global high yield (-€1.5 bn) as well as equities Europe (-€1.2 bn), equities North America mid-/small-cap (-€1.2 bn), and equities Euroland (-€1.1 bn).

Fund Flows by Markets

The fund market inflows for long-term funds were dominated by funds domiciled in the international cross-border hubs (+€17.4 bn), followed by funds domiciled in Italy (+€4.9 bn), Germany (+€2.6 bn), and France (+€2.0 bn). Meanwhile, the United Kingdom (-€3.3 bn), Portugal (-€0.5 bn), and Austria (-€0.3 bn) stood on the other side.

Graph 2: Estimated Net Sales by Country, August 2014 (Euro Millions)

14-10-13 Market Flows

Source: Lipper FundFile

The net inflows into equity funds were dominated by international cross-border funds (+€1.8 bn), followed by funds domiciled in Belgium (+€0.8 bn), Spain (+€0.3 bn), France (+€0.2 bn), and Norway (+€0.1 bn). Funds domiciled in the United Kingdom (-€1.6 bn), Germany (-€1.0 bn), and Austria (-€0.2 bn) stood at the other end of the table.

Within the bond sector funds domiciled in the international cross-border hubs (+€6.4 bn) also dominated the scene, followed by funds domiciled in Italy (+€1.8 bn), Germany (+€1.0 bn), and the Netherlands (+€0.8 bn) as well as Spain (+€0.7 bn). On the other side the United Kingdom (-€0.6 bn) was the domicile with the highest net outflows from bond funds, bettered somewhat by funds domiciled in Belgium (-€0.5 bn) and Austria (-€0.2 bn).

Fund Flows by Promoters

BlackRock, with net sales of €2.0 bn, was the best selling group of long-term funds for August, ahead of Deutsche Asset & Wealth Management (+€1.5 bn) and Vanguard (+€1.4 bn) as well as Pioneer (+€1.4 bn) and JP Morgan Asset Management (+€1.3 bn).

Graph 3: Market Share of the Ten Best Selling Groups, August 2014 (%)

14-10-13 Market Share Groups

Source: Lipper FundFile

On a single-asset basis DeAWM (+€1.5 bn) was the best selling promoter of bond funds for August, followed by BlackRock (+€1.0 bn) and Pioneer (+€1.0 bn) as well as Legg Mason (+€0.9 bn) and Think Capital (+€0.7 bn). Within the equity space HSBC (+€1.1 bn) stood at the top of the table, followed by Vanguard (+€1.0 bn) and Banque Degroof (+€0.8 bn) as well as Nordea (+€0.4 bn) and Grantham, Mayo, Van Otterloo & Co. LLC (GMO) (+€0.3 bn).

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