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The European mutual fund industry experienced net outflows (-€1.4 bn) from long-term mutual funds for December. In the rough market conditions mixed-asset funds (+€11.6 bn) and property funds (+€0.3 bn) were the only asset classes with net inflows, while bond funds (-€5.7 bn) and equity funds (-€5.4 bn) as well as “other” funds (-€1.4 bn), commodity funds (-€0.5 bn), and alternative/hedge products (-€0.3 bn) suffered net outflows for December. The outflows for December brought down the full-year net inflows into long-term mutual funds to €348.0 bn.

Even after the outflows for December, bond funds (+€164.0 bn) were the best selling asset type for 2014, followed by mixed-asset funds (+€124.5 bn) and equity funds (+€61.3 bn) as well as property funds (+€4.1 bn) and alternative/hedge products (+€1.3 bn). The only two asset types that suffered net outflows in the long-term segment were “other” funds (-€5.1 bn) and commodity funds (-€2.2 bn).

Money Market Products

In line with the long-term products, money market products also faced net outflows for December; money market funds posted outflows of €17.6 bn, whereas enhanced money market funds enjoyed small net inflows of €0.03 bn. These flows drove down the full-year net inflows for 2014 to money market products to €19.6 bn.

For December money market GBP (+€6.2 bn) saw the highest net inflows in the money market category, while money market EUR (-€22.0 bn) faced the highest net outflows of all the fund sectors covered in the Lipper FMI database. Money market EUR was bettered somewhat by money market USD (-€3.1 bn) and money market NOK (-€0.4 bn). These flows showed once again how active European investors use money market products in their asset allocation.

Graph 1: Estimated Net Sales, December 2014 (Euro Millions)

15 02 ENS by Asset TypeSource: Lipper FundFile

The December flows drove down the overall 2014 net inflows in the European mutual fund industry to €367.6 bn, which was still a new record in terms of flows for the European mutual fund industry.

Fund Flows by Sectors

According to the overall net flows for December, asset allocation (+€7.4 bn) was the best selling sector with regard to long-term funds, followed by bonds EUR corporate investment-grade funds (+€3.3 bn) and bonds EUR funds (+€3.3 bn) as well as equities North America funds (+€2.2 bn) and mixed-asset balanced funds (+€1.7 bn). At the other end of the spectrum bonds USD corporate high yield funds suffered net outflows (-€4.5 bn), bettered somewhat by bonds global high yield funds (-€3.2 bn) as well as equities Germany funds (-€2.1 bn), bonds emerging markets in local currencies funds (-€2.0 bn), and equities emerging markets funds (-€1.8 bn).

With net inflows of €70.9 bn, asset allocation was by far the best selling sector for 2014, far ahead of the second best selling sector—bonds EUR (+€31.6 bn), followed by mixed-asset conservative (+€29.6 bn). At the other end of the spectrum bond USD corporate high yield funds suffered the largest net outflows (-€15.2 bn), bettered somewhat by guaranteed funds (-€14.6 bn) as well as equities Germany funds (-€9.8 bn), bonds USD funds (-€4.3 bn), and equities United Kingdom funds (-€3.9 bn).

Graph 2: Ten Top Sectors, December 2014 (Euro Millions)
15 02 Top Ten Sectors by FlowsSource: Lipper FundFile

Fund Flows by Markets

Single fund market flows for long-term funds showed a mixed but positive picture for December; 12 of the 33 markets covered in this report showed net inflows. The single market with the highest net inflows for December was Italy (+€2.5 bn), followed by Sweden (+€2.2 bn) and the United Kingdom (+€2.0 bn). Meanwhile, the international fund hubs (Ireland and Luxembourg) (-€8.3 bn), Norway (-€2.6 bn), and Portugal (-€.2 bn) stood on the other side.

Despite the net outflows for December, the international fund hubs (+€179.4 bn) were able to maintain their position as the best selling domiciles over the course of 2014, followed by Italy (+€48.3 bn), Spain (+€22.0 bn), and Germany (+€21.7 bn). Meanwhile, the Netherlands (-€2.0 bn), Russia (-€0.7 bn), and Portugal (-€0.4 bn) stood on the other side.

Graph 3: Estimated Net Sales by Country, December 2014 (Euro Millions)
15 02 Market FlowsSource: Lipper FundFile

Within the equity sector funds domiciled in Sweden (+€1.1 bn) led the table, followed by those in Denmark (+€0.7 bn), Switzerland (+€0.6 bn), the United Kingdom (+€0.6 bn), and Italy (+€0.2 bn). Meanwhile, equity funds domiciled in the international fund hubs—Luxembourg and Ireland (-€5.4 bn), in Germany (-€1.4 bn), and in Norway (-€1.4 bn) stood at the other end of the table.

The net inflows into bond funds were driven by funds domiciled in Italy (+€1.1 bn), followed by funds domiciled in Germany (+€1.0 bn), France (+€0.4 bn), and Sweden (+€0.3 bn) as well as Finland (+€0.3 bn). On the other side the international fund hubs (-€6.6 bn) were the domiciles with the highest net outflows from bond funds, bettered somewhat by funds domiciled in Norway (-€1.1 bn) and Switzerland (-€0.8 bn).

With regard to mixed-asset products the flows were driven by net inflows into funds domiciled in the international fund hubs (+€4.8 bn), followed by those domiciled in the United Kingdom (+€1.5 bn), Italy (+€1.4 bn), Germany (+€1.1 bn), and Sweden (+€0.8 bn). Overall, only 7 of the 33 countries monitored in the FMI database showed net outflows from mixed-asset products. The Netherlands, with small net outflows of €55 m, Poland (-€10 m), and Slovenia (-€7 m) stood at the end of the table, while the outflows from the other four countries were all below €1 m.

Over the full course of 2014 the international fund hubs led the market sales tables for bonds (+€77.2 bn), equities (+€53.1 bn), and mixed-asset products (+€44.9 bn).

Fund Flows by Promoters

At the promoter level Vanguard, with net sales of €2.6 bn, was the best selling group of long-term funds for December, ahead of Nordea (+€1.3 bn) and Amundi (+€1.0 bn). Over the full course of 2014 BlackRock (+€29.0 bn) was the best selling promoter of long-term funds, followed by Intesa SP (+€16.7 bn) and DeAWM (+€16.6 bn).

Graph 4: Market Share of the Ten Best Selling Groups, December 2014 (%)
15 02 Market Share GroupsSource: Lipper FundFile

Considering the single-asset bases, DeAWM (+€1.7 bn) was the best selling promoter of bond funds for December, followed by BlackRock (+€1.4 bn) and Amundi (+€0.9 bn). Within the equity space Vanguard (+€1.9 bn) stood at the top of the table, followed by UBS (+€1.4 bn) and GMO (+€0.7 bn).

Over the full course of 2014 BlackRock (+€22.6 bn) was the best selling promoter of bond funds, followed by DeAWM (+€11.3 bn) and Den Norske (+€8.8 bn). Within the equity space Vanguard (+€11.0 bn) stood at the top of the table, followed by UBS (+€5.7 bn) and JP Morgan (+€5.5 bn).

Table 1: Ten Best Selling Funds, December 2014 (Euro Millions)

15 02 Fund Flows Graph 4 Top Ten Funds

Source: Lipper FundFile

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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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