02.28.2022

UCITS Had Record Year in 2021

02.28.2022
Trading Europe From ‘Across the Pond’

The European Fund and Asset Management Association (EFAMA) has published its latest monthly Investment Fund Industry Fact Sheet, which provides net sales data on UCITS and AIFs for December 2021, at European level and by country of fund domiciliation. A first overview of the net sales data of UCITS and AIFs over the full year 2021 is also included.

The main developments in 2021 can be summarised as follows:

Net sales of UCITS and AIFs rose to EUR 866 billion in 2021, compared to EUR 650 billion in 2020. Net assets of European investment funds grew by 17%, to reach EUR 22 trillion. 

Net sales of UCITS almost reached the EUR 800 billion mark (EUR 799 billion). This level was significantly higher than in 2020 (EUR 474 billion) and the previous historical record of 2017 (EUR 761 billion).

  • 2021 was an absolute record year for equity funds, with net sales surging to EUR 399 billion. The previous record was reached in 2017 with total net sales of EUR 163 billion. 
  • Bond funds had also a good year in 2021. Net sales amounted to EUR 177 billion in 2021, compared to EUR 85 billion in 2020. Still, this level was far from the record net sales of 2019 (EUR 303 billion) and 2017 (EUR 314 billion).
  • Multi-assets funds saw a significant rise in demand in 2021, as investors rediscovered the benefits of diversification across asset classes. Following three years of lacklustre net sales, multi-asset funds recorded net sales of EUR 186 billion, compared to EUR 29 billion in 2020.
  • Money market funds stopped attracting new money in 2021, in a context of strong economic recovery and ultra-low interest rates. Money market funds recorded slightly negative net outflows (EUR 2 billion), compared to net sales of EUR 215 billion in 2020. 

Net sales of AIFs fell to EUR 68 billion, compared to EUR 177 billion in 2020. This development can be explained by the very large net outflows recorded by AIFs domiciled in the Netherlands (EUR 159 billion). These outflows were mainly caused by the decision of several Dutch pension funds to stop managing their assets within AIF structures and make more use of segregated mandates.

Bernard Delbecque, Senior Director for Economics and Research at EFAMA, commented on the 2021 results: 2021 was a record year for UCITS for two main reasons. First, high hopes on the Covid-19 vaccination campaign prevailed over the risks posed by the variants of the virus.  Second, the strength of the economic recovery and the resulting strong performance of stock markets supported investor confidence. Overall, investors were very much in a “risk-on” mode, as net sales of UCITS equity funds reached a new record high of EUR 399 billion, well above the previous 2017 record of EUR 163 billion. It will be hard to beat this record in 2022 given the expected tightening of monetary policy and the current geopolitical and military tensions.

Analysing the data for December 2021 in particular, EFAMA highlighted the following:

  • Net sales of UCITS and AIFs totalled EUR 86 billion, up from EUR 71 billion in November.
  • UCITS recorded net inflows of EUR 49 billion, compared to net inflows of EUR 79 billion in November. 
  • Long-term UCITS (UCITS excluding money market funds) recorded EUR 58 billion of net sales, up from 44 billion in November.
    • Equity funds registered net inflows of EUR 20 billion, up from EUR 14 billion in November.
    • Net sales of bond funds increased to EUR 16 billion, compared to EUR 12 billion in November.
    • Multi-asset funds recorded net inflows of EUR 20 billion, up from EUR 14 billion in November.
  • UCITS money market funds recorded net outflows of EUR 9 billion, compared to net inflows of EUR 35 billion in November.
  • AIFs recorded net inflows of EUR 37 billion, compared to net outflows of EUR 8 billion in November.
  • Total net assets of UCITS and AIFs increased by 2.2% to EUR 21,964 billion.

Thomas Tilley, Senior Economist, commented on the December 2021 figures: Net sales of long-term UCITS remained robust in December 2021, as financial markets ended the year on a high note.”

Source: EFAMA

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