Net assets of UCITS and AIF funds climbed above the EUR14 trillion mark for the first time ever in 2016 with net sales contributing to 52 per cent of the rise in total assets, and market appreciation accounting for the reminder of the increase.
That’s according to the European Fund and Asset Management Association (EFAMA) latest Investment Funds Industry Fact Sheet, which provides net sales of UCITS and non-UCITS for December 2016 and the entire year of 2016, as well as net assets data at end 2016.
Despite multiple adverse shocks, the net sales of UCITS remained largely positive, albeit at a lower level than in 2014 and 2015.
Whilst the launch of the ECB’s quantitative easing program boosted the demand for UCITS in January-April 2015, UCITS did not benefit from any positive developments in 2016. On the contrary, the stock market plunge in early 2016, weak economic growth and the UK’s vote to leave the European Union created much uncertainty about the future, which slowed demand for UCITS. However, many investors continued to purchase UCITS in 2016 despite persisting market stresses, confirming the high level of confidence investors have in UCITS funds.
Equity and multi-assets were the clear losers in terms of net sales in the UCITS market, whereas bond funds and money market funds emerged as the winners.
Equity funds suffered a negative turnaround in net sales in 2016, as net sales never really recovered from the stock market sell-off in January.
After three years of constantly increasing net sales, multi-assets funds were the biggest losers in 2016, as investors tried to limit their – direct and indirect – exposure to stock markets.
After a difficult first quarter, bond funds enjoyed a strong rise in net inflows on the back of falling long-term interest rates.
The higher uncertainty and renewed downside risks continued to increase the demand for money market funds in 2016, in spite of very low returns.
Net sales of AIFs increased by 19.4 per cent in 2016 and surpassed UCITS in terms of net sales of long-term funds (EUR178 billion, compared to EUR169 billion), with a different ranking of best sellers funds.
Multi-asset funds were the clear winners among the mainstream asset classes, followed by real estate funds, bond funds and equity funds.
The move into “other” AIFs continued in 2016, as investors diversified more widely and focused more on investment outcomes.
Bernard Delbecque (pictured), director of economics and research, says: “The European investment fund industry ended 2016 with a new record high of assets under management, and good results in terms of net sales, considering the high degree of volatility in the financial markets and the rising political uncertainties. UCITS and AIF remain very attractive investment products in the eyes of investors, thanks to the protection offered by the regulation and the expected returns compared to alternative savings products.”
In December 2016, long-term UCITS (UCITS excluding money market funds) registered net sales of EUR18 billion, up from EUR1 billion in November. Net sales of equity funds increased to EUR9 billion, up from EUR6 billion in November, while net sales of bond funds rebounded from net outflows of EUR8 billion in November to net inflows of EUR6 billion in December. Multi-asset funds meanwhile, finished the month with net sales of EUR1 billion, up from EUR0.1 billion in November.
Money market funds registered net sales of EUR3 billion, compared to net sales of EUR9 billion registered in November, while total net sales of AIF totalled EUR11 billion, compared to EUR13 billion in November, and total net assets of UCITS increased 2.0 per cent to EUR8,725 billion in December, whereas AIF net assets increased 1.5 per cent to EUR5,477 billion. Total assets of UCITS and AIF ended December at EUR14,201 billion, 1.8 per cent higher than at end November.
Delbecque says: “UCITS enjoyed a rise in net sales in December, thanks to higher net inflows into equity funds and a return to positive net sales of bond funds.”
