Mutual fund inflows near 2006 high: Lipper
The amount invested in mutual funds across Europe last year was just short of its 2006 high, data from Lipper shows.
The data firm said even in spite of the summer outflows from equities across the continent, investors ploughed a net €367bn (£261bn) into funds in 2014. This was an increase of 95 per cent from 2013 and “just shy of the best ever total” of €372bn taken in 2006.
Lipper said in 2013 investors and fund managers had become preoccupied with an environment where interest rate rises were imminent, thanks largely to comments made by former US Federal Reserve chairman Ben Bernanke.
He hinted in June 2013 that the central bank’s support for the economy could be scaled back, words that hit both bond and equity markets sharply.
“A year on and monetary tightening that was expected on the back of the tapering expectations of the US quantitative easing programme failed to materialise,” Lipper said.
“In early 2014, many bond fund managers were busy reducing their [sensitivity to increases in interest rates] in expectation of the rate rises, and were subsequently hit by the ‘pain trade’ of anticipating these increases too early as yields fell further.
“A high-yield wobble on the back of comments made by new Federal Reserve chair Janet Yellen in August 2014 also spooked the markets as political events in Europe – Greece’s financial problems and Russia’s involvement in Ukraine – began to make a material return to investors’ concerns.”
The data for last year showed bond funds had their seventh consecutive year of growth, with a total of €164bn of estimated net sales for 2014.
The figure is counter-intuitive, given there has been a more palpable threat to markets of interest rates rising, something that can erode bond returns.
Bonds were “dominant over equities”, which only managed €60bn by comparison, but money kept flowing strongly into multi-asset funds.
“The success of mixed-asset funds was a continuing theme throughout Europe, with €125bn net being collected during the year,” Lipper said.
“However, the number of new mixed-asset fund launches was down for the first time since 2010, suggesting the trend may possibly have hit its peak.”
Commodity funds endured €2.2bn of net outflows during the year, a likely reaction to the precipitous fall in the price of oil, which began in the second half of 2014.
In terms of sectors, investors showed a clear appetite for income, with corporate bond funds seeing net inflows of €58bn.
“This was also interspersed with preferences for larger-cap, ‘safe-haven’ equities in the US and Europe,” the report said.
“The mixed-asset trend, which includes flows into fund-of-funds portfolios of varying risk, also reflected Europe’s preference for broad-based diversification in an increasingly fraught geopolitical environment.
“Higher-risk equities and emerging market regions [other than emerging market bonds] were barely represented in the top-25 sectors.”
In terms of groups, BlackRock’s €29bn of estimated net sales last year meant it “easily headed up the table”, while four groups notched up €16bn.
In spite of having only one fund, Neil Woodford was 23rd out of the top 25 in terms of estimated net inflows for 2014.
