European fund flows rebound
Exchange-traded funds and products listed in Europe gathered record net new assets in the first half of this year after total net new mutual fund flows rebounded in the region in 2014.
ETFs and ETPs listed in Europe gathered $40bn in net new assets in the first six months of this year, overtaking the previous record of $32bn in the first half of last year, according to consultancy ETFGI’s preliminary global insights report.
Equities had the largest net inflows of $3bn, while commodities had net outflows of $326m and fixed income had the largest net outflows of $1.7bn.
Deborah Fuhr, managing partner of ETFGI, said in a statement: “Market performance in the first half of 2015 was impacted by a number of uncertainties in the first half of 2015: the situation in Greece and the impact on the Eurozone, when the Fed will raise interest rates, volatility in the Chinese market and the MERS outbreak in South Korea.”
In the year-to-date in Europe, BlackRock’s iShares gathered the largest net ETF/ETP inflows with US$14.3 bn, followed by Societe Generale’s Lyxor AM with $6.1bn. In third place Deutsche Bank’s db x trackers/db ETC had $5.7bn of net inflows.
BlackRock was also the largest mutual fund manager in Europe last year according to The Boston Consulting Group’s latest annual study – Global Asset Management 2015: Sparking Growth with Go-to-Market Excellence.
BCG said the winner-take-all trend of recent year – in which the top managers in mutual fund flows also capture a large share of net new asset flow – accelerated in the US last year. The top ten US managers for mutual fund flows captured 68% of firms with positive flows, against 53% in 2013.
However in Europe last year, the winner-take-all phenomenon was unchanged as the top ten comprised 31% of players with positive flows, the same as in 2013. BCG said this was due to Europe’s more fragmented markets, where local managers are still the leading players in each country.
“The higher concentration in the US market relative to Europe is driven largely by the shift in investor preferences, particularly toward passive products such as ETFs, and the high concentration of leaders in those products, compared with smaller or slower-growing product categories,” added BCG. “ETFs represented 50% of mutual fund flows in the US, 12% in Europe, and 20% in Asia-Pacific.”
The BCG study said total mutual fund net flows rebounded in Europe in 2014 making the region one of the fastest-growing after being the weakest following the crisis. European net flows in 2014 reached 1.7% of prior-year assets under management , compared with 1.3% in 2013.
“Growth was driven in particular by very high net inflows in Spain and Italy and continued healthy flows in Scandinavian countries and Germany—despite weak performance in France and the UK,” dded BCG. “The rise of net flows in Europe reflected, in part, the progressive resumption of mutual fund sales by European banks.”
After the financial crisis banks had focused on deposit account sales in order to improve their balance sheets.
BCG said the global value of professionally managed assets grew to $74 trillion—the third consecutive annual record—and the industry’s profits rose to match their historic peak of $102bn in 2007. However traditional active products represented 39% of assets under management, far less than the 59% in 2003.
“This ongoing shift reflects investors’ persistent hunt for more outcome-oriented products, greater portfolio diversification, and less-expensive products in core categories,” added BCG. “Asset managers’ efforts to meet those needs helped drive 16% growth in assets held in solutions, including LDIs and retail solutions.”
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