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Fund Flow Digest

The first quarter of 2013 saw much welcomed inflows across most strategies with a buoyant sentiment leading to a number of new records being set.

January saw net inflows of €53bn, the highest one month net inflows into long term funds (excluding money market funds) in over 7 years. Of this, some €43.5bn went to cross-border funds, the highest one month total ever recorded.

The records set in January were driven equally by bond and equity funds (equity funds had inflows of €21bn, bond funds €20bn), a change from recent quarters

Allocators have finally begun to make ‘risk on’ selections with equity funds seeing Q1 2013 inflows of €43.6bn. This softening approach to risky assets is further highlighted by a significant increase of inflows to small cap funds.

By no means does this indicate that the bond fund juggernaut has relinquished its grasp on European markets. The last recorded net outflows were in November 2011 and since then bond funds have accumulated over €250bn. Q1 2013 alone, has seen €47.5bn flow into the sector and the latest indications show no sign of a slowdown

Country Spotlight: Spain

The Spanish investment fund market is one that is dominated by local asset managers, the majority of which are banking institutions. Unsurprisingly, the distribution landscape is dominated by retail banks although other channels are growing in significance.

Spain has been at the forefront of open architecture in Europe for quite some time. The emergence of platforms such as Tressis, Banco Inversis and Allfunds (the joint venture between Banco Santander and Intesa San Paolo) is testament to this. For many managers, such platforms have been the gateway into the €150bn Spanish market.

Since the financial crisis, banks have promoted deposits at the expense of fund sales for capital purposes. Following the deposit ‘war’ that ensued, the Spanish regulator took measures that have ultimately resulted in a revitalisation of fund sales in 2013 (Q1 2013 saw net UCITS inflows of €4bn).

Investment Strategies#

# Source: Lipper. Other includes guaranteed funds

Distribution Channels

Retail banks are the dominant channel accounting for 65% of fund sales. The remainder is split between institutions 12%, fund of funds 7%, private banks 6%, pensions 5% and IFA advised 5%.

The Quarter in Numbers

  • 5.5 the percentage growth in asset terms of UCITS funds in Q1 2013
  • 8 the number of consecutive months that long term fund sales (ex MMFs) have been greater than €20bn
  • 10 the number of European countries that attracted net inflows of over €1bn in Q1 2013
  • 200 the AUM in billions of Euro that was reached by absolute return funds in Europe for the first time

Irish eyes…

Irish domiciled funds continue to set new records with UCITS funds’ assets exceeding €1,000bn for the first time in Q1 2013. Not to be outdone, Non-UCITS funds had an AUM of €277bn as at 31st March 2013, an increase of 7% since the beginning of 2013

Notably, Ireland became the first jurisdiction to accept applications under AIFMD allowing many asset managers to gain a first mover advantage. The implementation date of AIFMD is 22nd July 2013 although some transition arrangements are in place.

The QIF (Ireland’s AIFMD compliant fund vehicle and soon to be renamed QIAIF) has enjoyed double digit growth in AUM in Q1 2013.

**Source: IFIA

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