Inflows to European long-term funds rose in October from a brief slump in August and September. European-domiciled open-end funds enjoyed net inflows of EUR45.6 billion after EUR38.8 billion in September, according to the latest data released by Morningstar.
Demand for alternative funds, which implement hedge-fund type strategies were the strongest rebounders, as investors returned foremost to multistrategy and long-short debt funds. Sales of allocation and equity funds were also up. Equity funds profited mainly from a return to favour of actively managed funds, which posted net inflows of EUR12.5 billion, the second-highest level of inflows in a one-month period in four years.
On the other hand, net subscriptions of bond funds hit a 10-month low. This was attributable to flagging demand for global emerging-markets bond funds, especially those investing in local currencies, as well as for global and high-yield bond funds.
With two months left in the year, the total tally into European open-end funds has risen above EUR600 billion, translating to a healthy organic growth rate of 10 per cent, as the equity market has continued to head higher despite recent jitters.
Swiss large-cap equity funds suffered their worst outflows in seven months. UBS and, to a much lesser degree, Credit Suisse open-end index funds were the main drivers of these outflows.
On a relative basis, the above-mentioned outflows were dwarfed by the stampede seen in Spain equity funds, which shed close to 6% of their assets in October. Outflows of EUR580 million were the highest seen since January 2008. This was arguably a result of the political turmoil seen in the Catalan region, which has been put under direct administration of the central government in Madrid. Investors mainly exited funds of La Caixa, but EDM and Santander were also affected.
PIMCO was again the sales-powerhouse in Europe, raking in EUR4.7 billion in October. Most of the net new money (EUR4.2 billion) was sent to the GIS Income fund. Of the EUR45.8 billion in net inflows sent to the funds in the year to date, EUR35.3 billion targeted the behemoth flexible-bond fund. The numbers illustrate how the current PIMCO success story hinges on the fortunes of a single fund.
Standard Life was net flow negative in all asset classes, but its alternative funds suffered the highest outflows: EUR899 million, the highest level seen since April.
Ali Masarwah, EMEA Editorial Director for Morningstar, says: “While the comeback of alternative multistrategy funds was one of the main trends in October’s flows, the monthly inflows of EUR1.5 billion were still the third-lowest this year. AQR, Aviva, and BlackRock enjoyed the highest inflows on a by-company comparison. Interestingly, the largest funds in this category either suffered high outflows (Standard Life Global Absolute Return Strategies) or were well below this year’s levels of inflows (Invesco Global Targeted Returns and Deutsche Concept Kaldemorgen).”
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