European long-term funds haemorrhage EUR160.3bn net outflows in first quarter

Europe from space

Europe’s long-term investment funds were hit with heavy estimated net outflows of EUR160.3 billion in the first three months of 2020, due to worsening markets as economies responded to the pandemic.

According to the quarterly European fund industry report from Refinitiv’s Lipper team, bond funds faced the highest overall outflows at EUR73.9 billion, followed by alternative UCITS funds (EUR32.9 billion outflows), mixed-assets funds (EUR18.5 billion outflows), and real estate funds (EUR2.8 billion in outflows).

“The flows were mainly driven by developments around the spread of the coronavirus and the lockdowns of economies around the globe since these circumstances may lead to a global recession with further falling stock markets,” says Detlef Glow, head of Lipper EMEA Research at Refinitiv.

Not all funds saw outflows, however, with best-selling equity global sector seeing inflows of EUR8.1 billion, and commodities funds gaining EUR5.5 billion.

“These flows indicate that European investors returned to risk-off mode over the course of the first quarter of 2020,” says Glow.

Money market products also attracted EUR34.4 billion over the course of the quarter, including inflows into money market ETFs, which gained EUR1.6 billion. 

“As European investors sold long-term mutual funds in a risk-off move, buying money market funds has been a logical step since these products are considered to be safe-haven products,” adds Glow.

“Central banks and governments have put rescue programs into place to reduce the impacts of lockdowns on the economy, as well as on the society in general, which will lead to an increase in outstanding government debt and a restart of the money printing machines. Taking all of this into account, it was not surprising that Q1 2020 was a tough period for the European fund industry.”

Furthermore, assets under management shrank from EUR12.3 trillion to EUR10.6 trillion over the period.

Within this, the report found that BlackRock far outstripped its rivals with EUR839.2 billion assets under management, making the largest fund promoter in Europe. It was followed by Amundi with EUR361.6 billion, JP Morgan EUR327.4 billion, UBS with EUR320.1 billion, and DWS Group with EUR278.8 billion.  

Meanwhile, Goldman Sachs had the highest net sales of all fund promoters, attracting EUR14.1 billion, ahead of Vanguard Group’s EUR8.9 billion, and UBS’s EUR5.1 billion.