Active managers predicament in Europe

Amid emerging-markets turmoil, sharply rising yields in the United States, and the escalating war of words in the China-US trade dispute, investors in Europe-domiciled funds shied away from most asset classes, selling long-term funds and money market funds alike in September 2018

Ali Masarwah 31.10.2018 | 12:38 Valerio Baselli

Long-term funds domiciled in Europe suffered net outflows of EUR 8.1 billion. Behind this headline figure, several remarkable trends played out. For one, alternative funds suffered the highest outflows in a one-month period on record, shedding EUR 7.4 billion. Allocation funds were net flow negative for the first time
since January 2016. Commodities funds witnessed their worst month of flows since December 2016. Money market products shed EUR 19.5 billion, driven by the redemption of shares in Irish-domiciled funds. Conversely, direct property funds pulled in their highest inflows in 12 months. These funds, mainly distributed in Germany, are direct investments in real estate and have seen solid demand in
recent years.

September flows were not all about risk-averse investors reacting to market shifts and reducing portfolio risks. A paramount theme was, yet again, the shift from actively managed funds to passive vehicles. This was the single most important trend in the equity and bond spaces, which becomes apparent when drilling deeper into asset-flow data.

While bond funds suffered total outflows of EUR 5.1 billion, passive funds were net flow positive, while actively managed fixed-income products suffered substantial outflows. The identical theme played out in the equity space (where total flows were, however, positive), with index funds garnering handsome inflows while actively managed funds bled. While stable equity markets continued to support the asset base of the fund industry, the stampede from actively managed funds will put fund promoters in a tight spot once markets turn volatile, as was the case in the first half of October. Total assets invested in long-term Europe-domiciled funds remained stable at EUR 8.636 trillion, down slightly from EUR 8.660 trillion per Aug. 31. The assets under management in money market funds were EUR 1.144 trillion, down from EUR 1.173 trillion.

Innskudd i europeiske fond september 2018

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Ali Masarwah

Ali Masarwah  Ali Masarwah ist als Chefredakteur für die deutschsprachigen Seiten von Morningstar verantwortlich.