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Investors pulled EUR18bn from European open-ended MFs in August

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Morningstar’s latest European fund flows figures reveal that fears about the Chinese economy and slumping returns have unsettled investors, who in August pulled nearly EUR18 billion from European open-end mutual funds, excluding money market funds.

This was the largest monthly net outflows since June 2013. Equity funds suffered the largest outflows, at EUR 20.11 billion, while fixed-income funds saw redemptions of EUR 17.64 billion, largely from high-yield bonds and funds with exposure to emerging markets.
  
The massive outflows did not hit index funds, as long-term index funds, exclusive of ETFs, recorded inflows of EUR 2.17 billion.Including ETFs, monthly inflows for index funds hit EUR 11.04 billion.
 
Alternative funds showed continued strong inflows, with the multistrategy (EUR 3.42 billion), market-neutral (EUR 1.31 billion) and global macro (EUR 605 million) alternative categories all placing in the top 10 for monthly net inflows.
 
Inflows for the alternative market-neutral equity category continued to be strong, with the category showing an impressive YTD organic growth rate of 50 per cent.
 
Outflows were highly concentrated among a few large players, and 50.9 per cent of companies reporting experienced positive flows in August in their open-end funds.
 
At the provider level, Pioneer enjoyed the highest inflows, taking in EUR 1.55 billion in August, with Invesco and Credit Suisse also topping inflows of EUR 1 billion.
 
M&G, Franklin Templeton and Aberdeen have suffered a total of EUR 32.5 billion in outflows so far this year, with Aberdeen losing assets corresponding to 15.7 per cent of its 2014 year-end asset base.
 
Of Europe’s 10 largest funds, only Standard Life’s two vehicles for its Global Absolute Return Strategy were able to garner positive flows in August.
 
Matias Möttölä (pictured), manager research analyst for Morningstar, says: “Investors had every reason to be shaken in August: In EUR terms, the equity market drawdown was larger than any experienced in a single month since the abyss of the financial crisis in November 2008. No wonder then that equity funds lost the most assets, with net outflows of EUR 20.1 billion for the month. Emerging markets were the worst hit, with the Morningstar Emerging Markets Index losing 10.0 per cent of its value in euros. The last time European open-end equity funds had outflows of this magnitude was in August 2011, when fears of a Greek exit from the eurozone pushed outflows to EUR 20.8 billion.”

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