Long-term funds in Europe enjoyed another month of stellar inflows in March, taking in net EUR38.5 billion, the second-highest monthly inflow since May 2015.
Inflows to bond funds contributed the most to the total, at EUR25.6 billion, largely fuelled by high demand for emerging-markets bond funds as well as for flexible and diversified bond products. Euro government bond and euro long-term bond funds saw outflows.
Allocation funds continued to see large inflows, taking in EUR10.9 billion, the highest level since May 2015. Actively managed equity funds, however, suffered outflows of EUR3.3 billion. These were mirrored by inflows of EUR3.3 billion in to open-end index funds.
The largest single category inflows for March were seen in the Morningstar Global Flexible Bond – USD Hedged category, with inflows of EUR4.6 billion; PIMCO GIS Income contributed the largest slice at EUR3.9 billion.
Global Emerging-Markets Bond – Local Currency funds also featured strongly, taking more inflows in March than in any single month since January 2013: the main beneficiaries were BlackRock, GAM and HSBC. In terms of outflows by category, funds in the EURDiversified Bond category saw the highest net outflows at EUR2.2 billion in March; USD High-Yield Bond funds also witnessed high redemptions with EUR1.9 in net outflows, closely followed by Europe Large-Cap Blend Equity at 1.8 billion in outflows.
Among the largest fund providers in Europe, PIMCO led the inflows with EUR4.9 billion in March, bringing the manager’s 12-month flows to EUR19 billion; BlackRock, Amundi and Vanguard also posted strong inflows at Euro 3.1 billion, EUR2.6 billion, and EUR2.5 billion respectively; Pioneer Investments saw the largest outflows at EUR1.5 billion, with two thirds of redemptions coming from bond funds; AXA saw net outflows at 1.1 billion.
Among the largest funds in Europe, PIMCO GIS Income saw the largest inflows – in March, the fund took in EUR3.9 billion out of EUR15.3 billion in the past 12 months, amounting to 80 per cent of all PIMCO inflows during the period.
At EUR68 million, the March inflows for Templeton Global Total Return also stand out for being the fund’s first month with positive flows since December 2014.
Ali Masarwah (pictured), EMEA editorial director for Morningstar, says: “The March fund flows illustrate investors’ preference for higher-yielding fixed-income assets in times of ultralow interest rates. Money Market funds also rebounded strongly after posting outflows in February, with French-domiciled funds raking in the largest chunk of inflows by fund domicile.
“March also brought a setback for actively managed equity funds in Europe. After enjoying inflows in the first two months of the year, flows to active funds were back in the red in March, dashing industry hopes of a substantial turn-around in the first quarter. On a broad category level, open-end equity funds were virtually flat in March as inflows into open-end index funds equalised outflows from actively managed funds. Overall, equity index funds continued to thrive as equity ETFs, which are not part of our open-end data, enjoyed additional inflows of EUR6.2 billion.”
