Monday 19 August 2019 8:24 am

European funds back to modest inflows amid tough conditions

The European fund industry has weathered volatile conditions to enjoy estimated net inflows for the first half of 2019, after seeing estimated net outflows for the first time since 2011 last year.

Mutual funds in Europe saw estimated net inflows of €41.3bn (£38.1bn) for the first half of the year, according to Refinitiv’s review of the industry. 

Total assets under management have increased from €9.9 trillion to €11.4 trillion, driven by the performance of underlying markets, which added €1.5 trillion. Net sales were less successful however, contributing outflows of €41.3bn.

Exchange traded funds (ETFs) have continued to grow more popular in Europe, with net sales of €36.1bn during the first half of the year and assets under management growing from  €633.1bn at the end of last year to €746.8bn. 

Detlef Glow, head of EMEA research at Lipper and author of the report, said that ETFs appeal to investors because of their “transparency and liquidity”. 

“In a market environment with increased volatility, you really want to know what you’re invested in,” he added. 

Continuing a trend that has been seen across the investment sector, bonds received a boost. Bond funds were by far the best selling asset type during the first half, with €130.7bn of inflows. 

Glow said it was unsurprising that bond funds were performing well. “At the end of the day, they are a kind of safe haven,” he told City A.M.

Mixed-asset funds were the second best-selling asset type, but came in quite far behind bond funds with €16bn of sales. Real estate funds came in third with €4bn of sales, followed by commodity funds with €0.6bn. 

Equity funds performed less well during the first half of 2019, experiencing the highest net outflows of any asset type at €53.7bn.  

Current geopolitical volatility makes it harder to predict how European funds will fare during the rest of 2019, Glow said, adding: “As long as we don’t head into a major market crisis, I think that 2019 will be a good year for the fund industry.”

Main image credit: Getty