Bonds Are European Investors' Darlings For April 2015

by: Lipper Insight at Thomson Reuters

By Detlef Glow

After Q1 2015, which had the highest net inflows into mutual funds ever, the European fund industry enjoyed another month of high net inflows, with long-term mutual funds enjoying net inflows of €59.2 bn during April. Opposite to March, the majority of the flows went into bond funds (+€27.9 bn), followed by mixed-asset funds (+€22.7 bn), equity funds (+€6.1 bn), and alternative/hedge products (+€2.5 bn) as well as property funds (+€0.6 bn) and commodity funds (+€0.1 bn). On the other side of the table, "other" products (-€0.8 bn) were the only category facing outflows for April.

Money Market Products

In line with the long-term products, money market products also enjoyed net inflows (+€16.1 bn) for April, split into net inflows of €15.1 bn into money market products and €1.0 bn into enhanced money market funds.

These inflows lifted the overall net inflows for April to a healthy €75.3 bn and the overall net inflows for 2015 to an outstanding €239.7 bn.

Graph 1: Estimated Net Sales, April 2015 (Euro Millions)

Source: Lipper FundFile

Fund Flows by Markets

Single fund market flows for long-term funds showed a positive picture for April, since only 9 of the 33 markets covered in this report showed net outflows. As was to be expected, long-term mutual funds domiciled in the international fund hubs (+€36.9 bn) enjoyed the highest net inflows for April. The single market with the highest net inflows was once again Italy (+€6.2 bn), followed by the United Kingdom (+€5.9 bn) and Germany (+€4.1 bn). Meanwhile, Spain (-€0.4 bn), Norway (-€0.3 bn), and Turkey (-€.0.1 bn) stood on the other side.

Graph 2: Estimated Net Sales by Country, April 2015 (Euro Millions)

Source: Lipper

Within the equity sector funds domiciled in the United Kingdom (+€4.3 bn) led the table for April, followed by those domiciled in the international fund hubs (+€2.8 bn), the Netherlands (+€1.3 bn), Sweden (+€0.4 bn), and Spain (+€0.4 bn). Equity funds domiciled in Italy (-€1.1 bn), France (-€0.8 bn), and Norway (-€0.6 bn) stood at the other end of the table.

For bond funds the inflows were driven by funds domiciled in the international fund hubs (+€22.6 bn), followed by funds domiciled in Italy (+€2.2 bn), France (+€0.8 bn), Switzerland (+€0.8 bn), and Germany (+€0.6 bn). On the other side Spain (-€1.2 bn) was the domicile with the highest net outflows from bond funds, bettered somewhat by funds domiciled in the United Kingdom (-€0.2 bn) and Belgium (-€0.1 bn).

With regard to mixed-asset products, the flows were also driven by net inflows into funds domiciled in the international fund hubs (+€8.1 bn), followed by those domiciled in Italy (+€5.4 bn), Germany (+€2.8 bn), Spain (+€1.9 bn), and the United Kingdom (+€1.6 bn). Only 6 of the 33 countries covered in this report showed net outflows from mixed-asset products, with funds domiciled in Turkey showing the highest outflows (-€63 m).

Fund Flows by Promoters

State Street, with net sales of €7.8 bn, was the best selling group of long-term funds for April, ahead of Intesa Sanpaolo (OTCPK:ISNPY) (+€4.5 bn) and BlackRock (NYSE:BLK) (+€2.8 bn).

Table 1: Ten Best Selling Groups, April 2015 (Euro Millions)

Source: Lipper

Considering the single-asset bases, BlackRock (+€4.5 bn) was once again the best selling promoter of bond funds for April, followed by Intesa SanPaolo (+€2.3 bn) and JPMorgan (NYSE:JPM) (+€1.2 bn). Within the equity space State Street (NYSE:STT) (+€7.6 bn) stood at the top of the table, followed by UBS (NYSE:UBS) (+€1.5 bn) and ABN AMRO (+€1.4 bn). Intesa Sanpaolo (+€2.4 bn), Pioneer (+€1.3 bn), and Nordea (OTCPK:NRBAY) (+€1.2 bn) were the best selling promoters of mixed-asset products.

Best Selling Funds

The ten best selling funds gathered inflows of €26.1 bn, 34.63% of the overall inflows for April, showing that fund flows in Europe are highly concentrated. With regard to the overall flows, it is remarkable that five of these ten funds were equity funds, gathering €9.5 bn, which was more than the total inflows in this asset class for April. These were followed by three mixed-asset funds, gathering €2.4 bn, and two bond funds (+€1.6 bn).

Table 2: Ten Best Selling Funds, April 2015 (Euro Millions)

Source: Lipper

These numbers lead to the assumption that the net inflows in the equity sector are highly concentrated, while the inflows in the bond and mixed-asset segments are coming from a broad number of products.