European investors switch to risk-off mode in June

European investors anticipated market turmoil from the “Brexit” vote in the United Kingdom during June; they sold equity (-€19.2 bn) and mixed-asset funds (-€4.0 bn), while they bought bond funds (+€1.0 bn), alternative UCITS products (+€0.7 bn), commodity funds (+€0.4 bn), real estate products (+€0.3 bn), and “other” funds (+€0.2 bn). These fund flows drove the overall flows into long-term investment funds to a negative €20.6 bn for June.

Money Market Products

Money market products (-€0.1 bn) were also impacted by the Brexit vote during June.

This flow pattern drove the overall fund flows to mutual funds in Europe to net outflows of €20.7 bn for June. Despite these outflows, the European fund industry still enjoyed inflows of €29.5 bn over the course of 2016 so far.

Money Market Products by Sector

Within the money market fund segment Money Market USD (+€14.0 bn) was once again the best selling sector for June, also again followed by Money Market GBP (+€6.2 bn) and Money Market NOK (+€0.3 bn). At the other end of the spectrum Money Market EUR (-€20.1 bn) again suffered the highest net outflows, bettered by Money Market SEK (-€0.5 bn) and Money Market CHF (-€0.2 bn). Comparing this flow pattern with the flow pattern for May showed that European investors sold the euro and further bought back into the U.S. dollar and the British pound.

Graph 1: Estimated Net Sales by Asset Type, June 2016 (Euro Billions)

16-07-18 Graph 1

Source: Thomson Reuters Lipper

Fund Flows by Sectors

Within the segment of long-term mutual funds Bond USD (+€1.7 bn) was the best selling sector, followed by Bond EUR Short-Term (+€1.6 bn), Equity Global (+€1.3 bn), and Bond Global Corporates (+€0.9 bn) as well as Bond EUR Long-Term (+€0.9 bn).

Graph 2: Ten Top Sectors, June 2016 (Euro Billions)

16-07-18 Graph 2 Top Sectors

Source: Thomson Reuters Lipper

 

At the other end of the spectrum Equity Europe (-€4.8 bn) suffered the highest net outflows from long-term mutual funds, bettered somewhat by Equity US (-€3.0 bn) and Equity Japan (-€2.1 bn) as well as Equity Europe ex UK (-€1.7 bn) and Bond Europe High Yield (-€1.7 bn).

Graph 3: Ten Bottom Sectors, June 2016 (Euro Billions)

16-07-18 Graph 3 - Sector Outflows

Source: Thomson Reuters Lipper

Fund Flows by Markets

Single fund market flows (including those to money market products) showed a negative picture for June, with 11 of the 34 markets covered in this report showing net inflows and 23 showing net outflows. Ireland (+€17.1 bn), Switzerland (+€4.8 bn), Germany (+€0.9 bn), Iceland (+€0.1 bn), and the Netherlands (+€0.04 bn) were the domiciles with the highest overall net inflows, while France was the single market with the highest net outflows (-€24.7 bn), bettered by Luxembourg (-€13.2 bn) and Denmark (-€1.0 bn).

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

16-07-18 Graph 4 Flows by Domicile

Source: Thomson Reuters Lipper

Within the equity sector funds domiciled in Switzerland (+€2.7 bn) led the table for June, followed by those domiciled in France (+€0.4 bn), Germany (+€0.2 bn), Liechtenstein (+€0.1 bn), and Iceland (+€0.01 bn). Equity funds domiciled in Luxembourg (-€13.8 bn), Ireland (-€4.0 bn), and the United Kingdom (-€1.7 bn) stood at the other end of the table.

For bond funds, products domiciled in Ireland (+€1.9 bn) again led the table for June, followed by funds domiciled in Switzerland (+€1.4 bn), the Netherlands (+€0.4 bn), and Germany (+€0.3 bn) as well as Spain (+€0.2 bn). Meanwhile, Luxembourg (-€1.5 bn), Denmark (-€0.6 bn), and the United Kingdom (-€0.4 bn) were the domiciles with the highest net outflows from bond funds.

With regard to mixed-asset products the United Kingdom (+€0.4 bn) was the domicile with the highest net inflows, followed by funds domiciled in Germany (+€0.1 bn), Austria (+€0.02 bn), Guernsey (+€0.02 bn), and Finland (+€0.01 bn). On the other side of the table funds domiciled in Luxembourg showed the highest net outflows (-€3.1 bn), bettered by funds domiciled in France (-€0.3 bn) and Spain (-€0.2 bn).

The United Kingdom (+€0.9 bn) was the domicile with highest net inflows into alternatives for June, followed by Ireland (+€0.4 bn), Sweden (+€0.1 bn), and Spain (+€0.03 bn) as well as Poland (+€0.02 bn). Italy (-€0.3 bn), bettered by France (-€0.2 bn) and the Netherlands (-€0.2 bn), stood at the other end of the table.

Fund Flows by Promoters

BlackRock, with net sales of €5.7 bn, was the best selling fund promoter for June overall, ahead of Credit Suisse (+€3.7 bn) and Aviva (+€2.9 bn).

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

 16-07-18 Table 1 - Top Promoter

Source: Thomson Reuters Lipper

Considering the single-asset bases, BlackRock (+€1.3 bn) was the best selling promoter of bond funds for June, followed by Pictet (+€0.8 bn), AB (+€0.8 bn), and Vanguard (+€0.5 bn) as well as Aviva (+€0.5 bn). Within the equity space Credit Suisse (+€2.8 bn) stood at the head of the table, followed by Lansfosakringa (+€0.5 bn), Fundsmith LLP (+€0.5 bn), and Agicam (+€0.4 bn) as well as Questo (+€0.3 bn). M&G (+€0.5 bn) was the leading promoter of mixed-asset funds in Europe, followed by Union Investment (+€0.3 bn), BNY Mellon (+€0.2 bn), and Fund Partners (+€0.2 bn) as well as La Francaise (+€0.2 bn). Nordea (+€0.9 bn) was the leading promoter of alternative funds for the month, followed by BlackRock (+€0.5 bn), Aviva (+€0.3 bn), and JP Morgan (+€0.3 bn) as well as Old Mutual (+€0.3 bn).

Best Selling Funds

The ten best selling long-term funds gathered at the share-class level total net inflows of €8.0 bn for June. The split of the ten best selling funds by asset type was not in line with the overall sales numbers, since equity funds (+€4.0 bn) were the dominating asset type among the top-ten funds list, followed by bond funds—with four funds (+€2.7 bn), absolute return products (+€0.8 bn)—with two funds, and target maturity funds (+€0.4 bn)—with one fund.

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

16-07-18 Table 2 - Best Selling Funds

Source: Thomson Reuters Lipper

Detlef Glow, head of EMEA Research at Thomson Reuters Lipper

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