Fund Flow Digest
The first half of 2013 was positive for UCITS funds with inflows of €144bn during the period. Notably, of the €144bn, only €13bn was contributed in Q2.
Q2’s lacklustre performance was due to the large outflows in June 2013. The month saw the largest single monthly outflow from UCITS funds since October 2009, with €65bn being withdrawn. The driver of this substantial outflow was the US Federal Reserve announcing its intention to begin tapering of quantitative easing. A flight from bond (€18bn) and money market (€40bn) funds ensued. Interestingly, the majority of outflows from bond funds were concentrated in the high yield and emerging market sectors with short term and flexible funds weathering the storm more successfully.
Previous newsletters have spoken of the resilience of bond funds at the expense of equity funds. This theme has continued with bond funds attracting inflows of €81bn in H1 2013 and equity funds only attracting €35bn. However, July figures show that equity funds had greater than double the inflow of bond funds for the month – the first time this has occurred since January 2011.
Balanced funds continue to see inflows with €61bn for H1 2013 – certainly a sector to watch.
Country Spotlight: Italy
This quarter we shall focus on Italy and the changes that have occurred there in 2013
The Italian market is fast becoming one of the strongest in Europe in terms of funds sales in this year. May 2013 saw €8.7bn of inflows, the highest single monthly inflow since May 1999. This inflow was split between local funds with €2.4bn and foreign funds with €6.3bn.
Looking at figures for H1 2013, the total inflow was €36bn. This is a remarkable recovery when compared to the outflows of €11.3bn seen in 2012.
All of these positive numbers have not gone unnoticed by cross-border managers. There has been an increased focus on the jurisdiction with a number of large asset managers recently partnering with local distributors to make a firm push on sales. One such manager believes the Italian funds market will double in the next 10 years.
Italian Fund Sales:
*Source: Lipper. Excludes Cross Border Funds
Investment Strategy Preference:
The Quarter in Numbers
- 4 the number of countries that recorded UCITS net inflows in excess of €5bn in Q2 2013 (Luxembourg, Italy, UK, Spain)
- 4.6 the percentage growth in asset terms of UCITS funds for H1 2013
- 6 the number of consecutive quarters where UCITS had net inflows
- 9.3 the combined AUM in trillions of Euro reached in Q2 2013 for UCITS and Non UCITS
Irish domiciled funds saw mixed fortunes in Q2 2013. UCITS funds saw a decrease in AUM of 3% compared to Q1, while NonUCITS funds saw an increase of 1.1% for the same period.
In contrast, both UCITS and NonUCITS saw increases in the number of funds in existence (1.4% for both UCITS and NonUCITS) in the quarter.
AIFMD was a key focus again with a number of asset managers establishing QIFs in advance of the implementation deadline of 22 July 2013. Blackrock became the first investment management firm to be approved in Ireland as an Alternative Investment Fund Manager (‘AIFM’) by the Central Bank of Ireland.
The chart below gives an insight into the UCITS numbers in Ireland.