ETFs attract most equity inflows in Europe, according to Lipper

Exchange traded funds continue to attract the most investment flows into European equity products, according to Lipper’s latest fund flow data.

The two bestselling funds last month were ETFs tracking Germany’s DAX index, reflecting both investors’ appetite for passive products and their trust in the strength of Germany’s economy.

The move from active to passive investments across Europe has continued over the past decade, with ETFs making up an increasingly significant proportion of total fund assets, Lipper notes.

ETFs now make up 7.8% of equity fund assets in Europe. Combined with traditional index tracking funds, passively managed products make up 16.8% of the total.

This marks an increase from just 5.5% at the end of 2001, when ETFs had only just arrived on European shores.

Active equity funds, on the other hand, have suffered more last month than the previous one.

However, Lipper notes the total outflows in September were not as high as each month from April to June.

At the moment, investors are favouring bond funds, which have once again enjoyed significant inflows of €20.8bn in September.

However, the proportion of assets invested in the lowest risk funds has actually fallen slightly since 2006, Lipper notes. Now, 44% of assets are invested in higher risk bond or equity funds.

When it comes to bonds, investors are particularly bullish on high yield bond products. Inflows this month have amounted to €5.7bn across different currencies.

Money market funds have significantly contributed to the net sales in September, too, bringing in €24.4bn.

Lipper notes a continued increase in cross border sales, which has also been the case over the past decade.

Between 2001 and the end of 2011, the share of cross border assets more than doubled, from 21% to 43%.

Ed Moisson, head of UK and cross-border research at Lipper, attributed this “change in the balance of power” to structural decisions by fund providers to re-domicile some existing funds to Luxembourg and Ireland and sell the cross border from there.

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