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European Fund-Flow Trends, January 2017

After the negative flow numbers at the end of 2016, January 2017 showed a positive picture for long-term mutual funds. European fund promoters enjoyed net inflows into bond funds (+€17.6 bn), followed by equity funds (+€9.8 bn), mixed-asset funds (+€5.7 bn), and alternative UCITS products (+€4.0 bn) as well as real estate funds (+€1.0 bn) and commodity funds (+€0.1 bn). “Other” funds (-€0.5 bn) was the only asset type that faced net outflows in the long-term mutual funds segment.These fund flows added up to overall net inflows of €37.7 bn into long-term investment funds for January. Exchange-traded funds (ETFs) contributed €10.4 bn to these flows.

Even though these flows were good news for the European fund industry, they could be explained as a seasonal effect, since a number of institutional investors allocate new money to the markets in January. That said, this January’s flows may also have marked a turning point, since investors seem to be becoming more comfortable with the political changes in Europe and the U.S. and may have started to invest again. A more detailed look at the sector level shows investors in fact did increase their exposure to international securities as well as to USD bonds.

Money Market Products

Money market products (+€26.9 bn) were once again the best selling asset type overall. In addition to the flows into mutual funds investing in money market instruments (+€23.8 bn), ETFs investing in these instruments also enjoyed net inflows (+€0.3 bn).

This flow pattern led the overall fund flows to mutual funds in Europe to net inflows of €64.6 bn for January.

Money Market Products by Sector

Money Market EUR (+€24.0 bn) was the best selling sector overall for January, followed by Money Market USD (+€7.9 bn) and Money Market NOK (+€0.1 bn). At the other end of the spectrum Money Market GBP (-€2.5 bn) suffered the highest net outflows of all sectors, bettered by Money Market EUR Leveraged (-€1.4 bn) and Money Market Global (-€0.7 bn). Comparing this flow pattern with the flow pattern for December 2016 shows that European investors decreased their positions in the British pound sterling—the best selling money market sector over the previous few months—and increased their positions in the euro.

Graph 1: Estimated Net Sales by Asset Type, January 2017 (Euro Billions)

 17 02 27 Graph 1 Flows by Asset Type

Source: Thomson Reuters Lipper

Fund Flows by Sectors

Within the segment of long-term mutual funds Equity Global (+€4.7 bn) was the best selling sector, followed by Bond Global (+€3.7 bn), Bond Emerging Markets Global in Hard Currencies (+€2.7 bn), and Bond USD High Yield (+€1.6 bn) as well as Bond Global High Yield (+€1.6 bn).

Graph 2: Ten Top Sectors, January 2017 (Euro Billions)

17 02 27 Graph 2 Best Selling Sectors

Source: Thomson Reuters Lipper

At the other end of the spectrum Equity Emerging Markets Global (-€1.0 bn) once again suffered the highest net outflows from long-term mutual funds, bettered somewhat by Bond EUR Corporates (-€0.9 bn) and Equity Europe Income (-€0.6 bn) as well as Target Maturity Bond EUR 2020+ (-€0.5 bn) and Absolute Return EUR Medium Term (-€0.5 bn).

Graph 3: Ten Bottom Sectors, January 2017 (Euro Billions)

17 02 27 Graph 3 Flop Sector Flows 

Source: Thomson Reuters Lipper

Fund Flows by Markets

Single fund domicile flows (including those to money market products) showed in general a positive picture for January, with 20 of the 34 markets covered in this report showing net inflows and 14 showing net outflows. France (+€29.6 bn), largely because of money market products (+€25.2 bn), was the fund domicile with the highest net inflows, followed at a distance by Luxembourg (+€18.8 bn), Ireland (+€10.5 bn), the United Kingdom (+€3.0 bn), and Switzerland (+€2.4 bn).On the other side of the table Italy was the single fund domicile with the highest net outflows (-€1.5 bn), bettered by the Netherlands (-€1.0 bn) and Belgium (-€0.7 bn).

Graph 4: Estimated Net Sales by Fund Domiciles, January 2017 (Euro Billions)

17 02 27 Graph 4 Flows by Domicile

Source: Thomson Reuters Lipper

Within the bond sector, funds domiciled in Ireland (+€7.9 bn) led the table for January, followed by those domiciled in Luxembourg (+€7.3 bn), the United Kingdom (+€1.8 bn), France (+€1.4 bn), and Switzerland (+€0.8 bn). Bond funds domiciled in Denmark (-€1.1 bn), Italy (-€0.6 bn), and Spain (-€0.4 bn) stood at the other end of the table.

For equity funds, products domiciled in Ireland (+€3.7 bn) led the table for January, followed by funds domiciled in Luxembourg (+€1.7 bn), France (+€1.5 bn), and Norway (+€1.3 bn) as well as Switzerland (+€1.0 bn). Meanwhile, the Netherlands (-€0.9 bn), the United Kingdom (-€0.5 bn), and Italy (-€0.1 bn) were the domiciles with the highest net outflows from equity funds.

With regard to mixed-asset products Luxembourg (+€3.5 bn) was the domicile with the highest net inflows, followed by funds domiciled in the United Kingdom (+€0.9 bn), Spain (+€0.6 bn), Germany (+€0.5 bn), and France (+€0.4 bn). On the other side of the table funds domiciled in Belgium showed the highest net outflows (-€0.3 bn), bettered somewhat by funds domiciled in Italy (-€0.2 bn) and Jersey (-€0.1 bn).

Luxembourg (+€1.8 bn) was the domicile with the highest net inflows into alternatives for January, followed by Ireland (+€1.2 bn), France (+€0.8 bn), and the United Kingdom (+€0.4 bn) as well as Belgium (+€0.1 bn). Italy (-€0.4 bn), bettered by the Netherlands (-€0.1 bn) and the Isle of Man (-€0.02 bn), stood at the other end of the table.

Fund Flows by Promoters

Amundi, with net sales of €12.2 bn, was the best selling fund promoter for January overall, ahead of BFT (Banque de Financement et de Tresorie) (+€5.8 bn) and BlackRock (+€5.6 bn).

Table 1: Ten Best Selling Promoters, January 2017 (Euro Billions)

17 02 27 Table 1 

Source: Thomson Reuters Lipper

Considering the single-asset bases, BlackRock (+€2.8 bn) was the best selling promoter of bond funds for January, followed by PIMCO (+€2.2 bn), Invesco (+€1.2 bn), and AXA (+€0.9 bn) as well as AG2R La Mondiale (+€0.8 bn).

Within the equity space BlackRock (+€2.0 bn) stood at the head of the table, followed by Vanguard Group (+€1.2 bn), DNB (+€1.0 bn), and State Street (+€0.9 bn) as well as Robeco (+€0.8 bn).

Allianz (+€0.9 bn) was the leading promoter of mixed-asset funds in Europe for January, followed by Union Investment (+€0.5 bn), JP Morgan (+€0.5 bn), and Flossbach von Storch (+€0.5 bn) as well as M&G (+€0.5 bn).

Schroders (+€0.5 bn) was the leading promoter of alternatives funds for the month, followed by Goldman Sachs (+€0.4 bn), Natixis (+€0.4 bn), and Old Mutual (+€0.3 bn) as well as BNY Mellon (+€0.3 bn).

Best Selling Funds

The ten best selling long-term funds gathered at the share-class level total net inflows of €7.9 bn for January. The split of the ten best selling funds by asset type was somewhat in line with the overall sales numbers, since bond funds (with six funds, +€5.4 bn) were the dominant asset type among the top-ten funds list, followed by equity funds (with two funds, +€1.2 bn), and commodity funds (with one fund, +€0.8 bn) as well as mixed-asset funds (with one fund, +€0.5 bn).

Table 2: Ten Best Selling Funds, January 2016 (Euro Millions)

17 2 27 Table 2 Best Selling Funds

Source: Thomson Reuters Lipper

Detlef Glow

Detlef Glow is Head of EMEA Research at Lipper, a Thomson Reuters flagship brand. In this position he is responsible for the Lipper research reports on the European ETF industry and special research reports on newsworthy market topics. Besides these tasks, he is acting as spokesperson for Lipper on TV and in print media, as well at conferences and expert panels. Detlef joined Lipper in mid 2005 from Feri Wealth Management, where he was Director of Portfolio Management, managing segregated accounts for high net worth individuals (HNWI). Prior to this he spent nine years with Tecis Holding AG, most recently as Head of Fund Research for Tecis Asset Management AG. In this role he was responsible for the quantitative and qualitative fund research for the Tecis fund of funds, the HNWI accounts and the recommendation list of funds for the financial adviser arm of Tecis. Detlef has an MBA focusing on Financial Services from the University of Wales/Cardiff, as well as a BA in Business Administration.”

Website: www.lipperweb.com

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