European equity funds attract positive flows despite negative outlook -Fitch

About a third of European equity funds attracted net new assets over the past 12 months, despite the overall negative net new money for the whole European equity funds universe, according to the latest European equity funds update published by Fitch Ratings.

European equity funds’ assets under management reached €330bn at the end of August 2012, fairly steady for the year-to-date, as outflows have been offset by the good market performance.

The style of European equity funds shifted toward a multi-cap bias, while also drifting towards a more growth profile.

“This move is consistent with Fitch’s analysis a year ago which highlighted the search for quality companies in a low growth environment,” Fitch said.

The report also identified wide funds’ performance dispersion among the universe of European equity funds, with small and mid-cap outperforming large cap by 3% and European funds outperforming eurozone funds by 3% year-to-date.

According to the research, on top of the growth versus value style, these factors largely contribute to the divergence between European funds performances. Pure alpha generation proved difficult to achieve.

“More than half of the funds delivered zero or negative alpha, with a relatively high proportion of large negative alpha generators”, says Charlotte Quiniou, director in Fitch’s Fund and Asset Manager Rating Group.

Fitch also outlined that two-thirds of total AUM is concentrated with just 30 companies. The three largest asset managers (Fidelity, Amundi and BNP Paribas) jointly manage 17.3% of European equity funds’ assets.

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