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European allocation funds surge, says Morningstar

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Investors are increasingly delegating the asset allocation in their portfolios to the managers of mixed-asset funds, according to Morningstar’s latest asset flow figures.

Investors sent EUR12.58 billion into allocation funds in January, from a total flows into long-term funds of EUR26.35 billion. Equity funds suffered net outflows of EUR2.27 billion, but inflows into index equity funds surged, as demand took inflows to EUR7.17 billion.
 
Actively managed equity funds witnessed outflows of EUR4.92 billion in January, while open-end equity index funds saw inflows of EUR2.65 billion.

India equity funds gathered inflows of EUR956 million, the highest recorded flows into the category since Morningstar began collecting industry-level fund flow data in 2007.

Swiss large-cap funds achieved record inflows in January of net EUR756 million; in contrast, Swiss small/mid-cap funds saw outflows of EUR422 million.

By category, GBP corporate bond funds saw the largest redemptions for the month, EUR3.26 billion, and January outflows from global emerging markets equity funds reached EUR1.56 million.

At a provider level, Credit Suisse had the highest inflows in January, taking in EUR2.05 billion; EUR1.1 billion of these inflows went to the firm’s equity index funds.

Europe’s largest open-end fund, M&G Optimal Income, which holds a Morningstar Analyst Rating of Silver, achieved net inflows of EUR569 million; this was bettered only by the UK-domiciled version of Standard Life Investments Global Absolute Return Strategies, which saw net inflows of EUR645 million.
 
Morningstar’s Ali Masarwah of Morningstar’s European Fund Flows team, says: “Investors witnessed several nerve-jolting events in January, including the re-emergence of the Greek crisis and the surprising decision of the Swiss National Bank to float the Swiss franc versus the euro. The month was arguably marked by a return to the risk-on mode, as witnessed by heavy outflows from actively managed equity funds and inflows of EUR21.06 billion into money market funds, which offer no return prospects.”

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