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European Fund Market Report, Q3-2016

Assets under Management

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

Detlef Glow is Head of EMEA Research at Lipper, a Thomson Reuters flagship brand. In this position he is responsible for the Lipper research reports on the European ETF industry and special research reports on newsworthy market topics. Besides these tasks, he is acting as spokesperson for Lipper on TV and in print media, as well at conferences and expert panels. Detlef joined Lipper in mid 2005 from Feri Wealth Management, where he was Director of Portfolio Management, managing segregated accounts for high net worth individuals (HNWI). Prior to this he spent nine years with Tecis Holding AG, most recently as Head of Fund Research for Tecis Asset Management AG. In this role he was responsible for the quantitative and qualitative fund research for the Tecis fund of funds, the HNWI accounts and the recommendation list of funds for the financial adviser arm of Tecis. Detlef has an MBA focusing on Financial Services from the University of Wales/Cardiff, as well as a BA in Business Administration.”

Website: www.lipperweb.com

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