European investors to continue risk-off mode

The sluggish market environment over the first two month of 2016 also impacted the net sales of mutual funds in Europe and led to estimated net outflows from long-term mutual funds for February, continuing the trend from January; the European fund industry faced net outflows of €24.5 bn from long-term mutual funds during February.

With regard to the overall flow pattern, it seemed European investors were set to further sell risky assets in a risk-off mode.

Bond funds (-€11.5 bn) were the asset type with the highest net outflows in Europe for February, bettered somewhat by equity funds (-€8.4 bn), mixed-asset funds (-€5.8 bn) and “other” products (-€0.8 bn). On the other side of the table, alternative UCITS products enjoyed once again the highest net inflows (+€1.1 bn), followed by real estate products (+€0.6 bn) and commodity funds (+€0.3 bn).

Money Market Products

After net inflows of €13.6 bn for January, money market products also seemed to be the investment vehicles of choice for investors in February; they enjoyed inflows of €2.8 bn over the month.

This flow pattern drove the overall fund flows in mutual funds in Europe to a negative €30.0 bn for 2016 so far.

Money Market Products by Sector

Within the money market segment Money Market EUR (+€5.5 bn) was the best selling sector for February, followed by Money Market GBP (+€1.2 bn) and Money Market SEK (+€0.9 bn). At the other end of the spectrum Money Market USD (-€4.9 bn) and Money Market EUR Leveraged (-€0.4 bn) suffered the highest net outflows. Comparing this flow pattern with the flow pattern for January shows that European investors continued to sell off U.S. dollar-based money markets products and bought further back into euro-based money market products in February.

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

16-03-21 Graph 1 - ENS by Asset Type

Source: Thomson Reuters Lipper

Fund Flows by Sectors

Within the segment of long-term mutual funds Absolute Return EUR Medium (+€1.6 bn) was the best selling sector, followed by Absolute Return EUR High (+€1.1 bn), Absolute Return Other (+€1.0 bn), and Bond USD Government (+€0.9 bn) as well as Equity France (+€0.7 bn).

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

 16-03-21 Graph 2- Sector Flows

Source: Thomson Reuters Lipper

At the other end of the spectrum Bond EUR Corporates (-€2.1 bn) suffered the highest net outflows from long-term mutual funds, bettered somewhat by Equity Japan (-€1.7 bn) and Absolute Return EUR Low (-€1.7 bn) as well as Equity US (-€1.6 bn) and Bond Convertibles Global (-€1.3 bn).

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

 16-03-21 Graph 3- Flop Sector Flows

Source: Thomson Reuters Lipper

Fund Flows by Markets

Single fund market flows (including those to money market products) showed a negative picture for February, with only 9 of the 34 markets covered in this report showing net inflows. Switzerland (+€1.5 bn), Ireland (+€1.2 bn), Norway (+€0.8 bn), Germany (+€0.4 bn), and Andorra (+€0.1 bn) were the domiciles with the highest overall net inflows, while Luxembourg was the single market with the highest net outflows (-€18.3 bn), bettered by the United Kingdom (-€2.8 bn) and Spain (-€0.8 bn).

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

 16-03-21 Graph 4- Market Flows

Source: Thomson Reuters Lipper

Within the equity sector funds domiciled in Switzerland (+€1.9 bn) led the table for February, followed by those domiciled in Belgium (+€1.1 bn), the Netherlands (+€0.3 bn), Norway (+€0.3 bn), and Finland (+€0.2 bn). Equity funds domiciled in Luxembourg (-€8.7 bn), Ireland (-€1.1 bn), and Sweden (-€0.8 bn) stood at the other end of the table.

For bond funds, products domiciled in Ireland (+€0.9 bn) led the table for February, followed by funds domiciled in Germany (+€0.7 bn), Norway (+€0.6 bn), and Belgium (+€0.1 bn). Meanwhile, Luxembourg (-€8.2 bn) was the domicile with the highest net outflows from bond funds, bettered by funds domiciled in France (-€1.0 bn) and Switzerland (-€0.8 bn).

With regard to mixed-asset products Ireland (+€0.3 bn) was the domicile with the highest net inflows, followed by funds domiciled in Germany (+€0.3 bn), Italy (+€0.1 bn), Switzerland (+€0.04 bn), and Finland (+€0.02 bn). On the other side of the table funds domiciled in Luxembourg showed the highest net outflows (-€3.1 bn), bettered somewhat by funds domiciled in the United Kingdom (-€2.2 bn) and Spain (-€0.5 bn).

Fund Flows by Promoters

BlackRock, with net sales of €5.4 bn, was the best selling fund group for February overall, ahead of Generali (+€2.9 bn) and Legal & General (+€2.3 bn).

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

 16-03-21 Table 1 - Top Ten Promoter

Source: Thomson Reuters Lipper

Considering the single-asset bases, BlackRock (+€1.4 bn) was the best selling promoter of bond funds for February, followed by KBC (+€1.0 bn), New Capital (+€0.8 bn), and DNB (+€0.7 bn) as well as Eurizon Capital (+€0.6 bn). Within the equity space KBC (+€1.0 bn) stood at the head of the table, followed by Nordea (+€0.6 bn), Northern Trust (+€0.5 bn), and Old Mutual (+€0.5 bn) as well as Deka (+€0.4 bn). The German Union Asset Management (+€0.3 bn) was the leading promoter of mixed-asset funds in Europe, followed by Mediolanum (+€0.1 bn), BNY Mellon (+€0.1 bn), and AQR Capital Management (+€0.1 bn) as well as Capita Financial (+€0.1 bn).

Best Selling Funds

The ten best selling long-term funds gathered at the share-class level total net inflows of €5.1 bn for February. The split of the ten best selling funds by asset type was not in line with the overall sales numbers, since bond funds (+€2.6 bn) and equity funds (+€2.5 bn) were—with five funds each—the only asset types among the top-ten funds.

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

16-03-21 Table 2 - Top Ten Funds

Source: Thomson Reuters Lipper

By Detlef Glow, head of EMEA Research at Thomson Reuters Lipper

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