European investors favored emerging markets during Q3-2016

The assets under management in the European fund industry stood at €9.0 tr at the end of third quarter 2016. Equities were the largest peer group with regard to the assets under management (€3.3 tr), followed by bond funds (€2.5 tr), mixed-asset funds (€1.7 tr), money market products (€1.1 tr), alternative UCITS funds (€0.2 tr), real estate products (€0.2 tr), as well as commodity funds (€0.03 tr) and “other” products (€0.02 tr). Exchange-traded funds (ETFs) held €480.1 bn in assets under management at the end of September, equalling a market share of 5.33% of the overall assets under management in Europe.

Graph 1: Assets under Management by Product Type, September 30, 2016 (Euro Billions)

16-10-31Quarterly Report Fund Market Europe Graph 1

Source: Thomson Reuters Lipper

European Fund-Flow Trends, Q3-2016

After two quarters of market turbulence third quarter 2016 showed a rather positive picture for the European fund industry, with equity funds (-€3.6 bn) being the only asset type that faced net outflows in the long-term funds segment during the quarter. On the other side of the table bond funds (+€61.6 bn) were the best selling asset type of long-term funds for the quarter, followed by mixed-asset funds (+€18.7 bn), alternative UCITS products (+€2.9 bn), commodity funds (+€1.2 bn), real estate funds (+€0.9 bn), and “other” products (+€0.3 bn). These fund flows added to overall net inflows of €81.8 bn into long-term investment funds for third quarter 2016.

ETFs contributed €15.4 bn to these flows. As they were for long-term mutual funds, ETFs investing in bonds (+€9.1 bn) were the best selling asset type, followed by equity funds (+€5.1 bn), commodity funds (+€1.0 bn), and “other” funds (+€0.3 bn). On the other side of the table alternative UCITS ETFs (-€0.2 bn) posted the highest net outflows for the quarter, bettered somewhat by mixed-asset products (-€0.03 bn).

Graph 2: Estimated Net Sales by Asset Type, Q3-2016 (Euro Billions)

16-10-31Quarterly Report Fund Market Europe Graph 2

Source: Thomson Reuters Lipper

Money Market Products

The developments in the money market segment were in line with those for long-term funds; money market products enjoyed inflows of €35.8 bn over third quarter 2016. In contrast, in the positive market environment money market ETFs posted net outflows of €0.5 bn to the overall flows of the money market segment.

This flow pattern led the overall fund flows to mutual funds in Europe to net inflows of €117.5 bn for third quarter 2016. With these overall inflows the European fund industry enjoyed net inflows of €185.2 bn over the course of 2016 so far.

Money Market Products by Sector

Money Market GBP (+€28.2 bn) was the best selling money market sector for third quarter 2016, followed by Money Market EUR (+€11.3 bn) and Money Market EUR Leveraged (+€0.7 bn). At the other end of the spectrum Money Market SEK (-€2.1 bn) suffered the highest net outflows, bettered somewhat by Money Market Global (-€1.6 bn) and Money Market JPY (-€0.7 bn).

Fund Flows by Sectors

Within the segment of long-term mutual funds Equity Emerging Markets Global (+€12.8 bn) was the best selling sector, followed by Bond Emerging Markets in Hard Currencies (+€11.3 bn), Bond Global (+€9.0 bn), and Bond Emerging Markets in Local Currencies (+€7.3 bn) as well as Equity Global (+€7.1 bn).

At the other end of the spectrum Equity Europe (-€7.6 bn) suffered the highest net outflows from long-term mutual funds, bettered by Equity EuroZone (-€4.7 bn) and Equity Japan (-€4.1 bn) as well as Bond EMU Government (-€4.0 bn) and Equity Europe ex UK (-€3.0 bn).

Graph 3: Ten Top and Bottom Sectors, Q3-2016 (Euro Billions)

16-10-31Quarterly Report Fund Market Europe Graph 3

Source: Thomson Reuters Lipper

Fund Flows by Domiciles

Single fund domicile flows (including those to money market products) showed a positive picture for third quarter 2016, with 22 of the 34 markets covered in this report showing net inflows and 12 showing net outflows. Luxembourg (+€56.6 bn), Ireland (+€35.4 bn), France (+€9.6 bn), Spain (+€5.9 bn), and Germany (+€4.6 bn) were the domiciles with the highest overall net inflows, while Belgium was the single fund domicile with the highest net outflows (-€3.6 bn), bettered by the Netherlands (-€1.0 bn) and Portugal (-€0.2 bn).

Graph 4: Estimated Net Sales by Fund Domiciles, Q3-2016 (Euro Billions)

 16-10-31Quarterly Report Fund Market Europe Graph 4

Source: Thomson Reuters Lipper

Within the bond sector, funds domiciled in Luxembourg (+€23.5 bn) led the table for third quarter 2016, followed by those domiciled in Ireland (+€21.6 bn), Spain (+€5.3 bn), the United Kingdom (+€4.1 bn), and Switzerland (+€1.7 bn). Equity funds domiciled in the Netherlands (-€0.8 bn), Austria (-€0.1 bn), and Liechtenstein (-€0.1 bn) stood at the other end of the table.

For equity funds, products domiciled in Ireland (+€3.8 bn) led the table for third quarter 2016, followed by funds domiciled in Belgium (+€2.1 bn), Sweden (+€2.0 bn), and Germany (+€1.4 bn) as well as Denmark (+€0.6 bn). Meanwhile, Luxembourg (-€7.1 bn), the United Kingdom (-€5.9 bn), and France (-€1.4 bn) were the domiciles with the highest net outflows from bond funds.

With regard to mixed-asset products Luxembourg (+€12.6 bn) was the domicile with the highest net inflows, followed by funds domiciled in the United Kingdom (+€3.3 bn), Germany (+€1.6 bn), Ireland (+€1.5 bn), and Spain (+€0.5 bn). On the other side of the table funds domiciled in Italy showed the highest net outflows (-€0.6 bn), bettered somewhat by funds domiciled in Belgium (-€0.6 bn) and France (-€0.1 bn).

Ireland (+€1.6 bn) was the domicile with the highest net inflows into alternatives products over third quarter 2016, followed by Luxembourg (+€1.1 bn), France (+€0.5 bn), and the United Kingdom (+€0.2 bn) as well as Denmark (+€0.1 bn). The Netherlands (-€0.3 bn), bettered somewhat by Sweden (-€0.2 bn) and Belgium        (-€0.1 bn), stood at the other end of the table.

Fund Flows by Promoters

BlackRock, with net sales of €18.9 bn, was the best selling fund promoter for third quarter 2016 overall, ahead of Aberdeen Asset Management (+€14.1 bn) and BNP Paribas (+€8.5 bn).

Table 1: Ten Best Selling Promoters, Q3-2016 (Euro Billions)

 16-10-31Quarterly Report Fund Market Europe Table 1

Source: Thomson Reuters Lipper

Considering the single-asset bases, BlackRock (+€11.0 bn) was the best selling promoter of bond funds for third quarter 2016, followed by PIMCO (+€5.4 bn), KBC (+€3.9 bn), and Pictet (+€3.2 bn) as well as La Caixa (+€3.0 bn). Within the equity space KBC (+€2.4 bn) stood at the head of the table, followed by Vanguard Group (+€2.4 bn), State Street (+€2.2 bn), and Union Investment (+€1.3 bn) as well as Nordea (+€1.3 bn). Nordea (+€5.4 bn) was the leading promoter of mixed-asset funds in Europe for third quarter 2016, followed by JP Morgan (+€2.8 bn), Flossbach von Storch (+€1.3 bn), and BNY Mellon (+€1.1 bn) as well as Aviva (+€1.1 bn). Goldman Sachs (+€0.7 bn) was the leading promoter of alternatives funds for the quarter, followed by Amundi (+€0.6 bn), Syquant Capital (+€0.4 bn), and Blackstone (+€0.4 bn) as well as Pictet (+€0.3 bn).

Detlef Glow, head of EMEA Research at Thomson Reuters Lipper

 

 

 

 

 

 

 

 

ABOUT THE AUTHOR
Mona Dohle
Mona Dohle speaks German and Dutch and is DACH & Benelux Correspondent for InvestmentEurope.

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