Net assets of UCITS and AIFs increased by 4.1% in Q2 2021 as total assets of European funds crossed the €20Trn threshold. Recent trends in UCITS net sales are outlined in the chart below.
Net Sales of UCITS – EUR Bln
In Q2, demand for equity funds remained strong although inflows were lower than in Q1. Net inflows to bond funds were slightly reduced. There were further outflows in money market funds in Q2. Inflows to multi-asset funds were substantially higher in Q2. This is in line with a trend over the past 10 years where multi-asset investment strategies have dominated the best sellers in Europe. Intermediaries and fund selectors have increasingly allowed asset managers to have more asset allocation freedom.
European equities performed well in Q2. Factors behind this included reducing Covid-19 infections, increased vaccine roll- out and strong corporate earnings. Economic data in the Eurozone was positive with the PMI rising to 59.2 in June, the highest level since 2006.
Flows into bond funds have been impacted by central bank signals that interest rate rises are drawing closer. This has sparked bond price declines.
Sources: EFAMA, Schroders, Ignites, FT
Country Spotlight: France
In terms of country of domiciliation, France is the 4th largest market in Europe. It should be noted that 2 of the top 20 asset managers worldwide by AUM are headquartered in France (Amundi & BNP Paribas).
Net Assets EUR Trn
France is the 3rd largest market for Irish funds. There are currently over 3,000 Irish funds registered there. France does not have 1 dominant distribution channel. A number of channels have sizeable market share including banks, financial investment advisors and insurance companies.
The French financial watchdog, the AMF, has been proactive in making proposals ahead of the European Commission’s review of AIFMD. These include:
- A review of delegation arrangements to ensure AIFMs remain ultimately in charge of key functions/decisions.
- An examination of reporting requirements to enhance regulatory supervision and monitor risks.
- A common EU framework for making liquidity management tools available in all jurisdictions.
- Further harmonisation between AIFMD/UCITS rules and MiFID.
Sources: EFAMA, Ignites, Funds Europe, Willis Towers Watson
The Quarter in Numbers
1.18 The number in € Trn of European ETF net assets Q2 2021
1.43 The number in € Trn of money market fund net assets Q2 2021
0.88 The number in € Trn of real estate fund net assets Q2 2021
37 The percentage of European net assets in AIFs
In Q2, Irish funds experienced the 2nd largest inflows in Europe, just behind Luxembourg.
Total Assets of Irish Domiciled Funds
The CBI recently fined a UCITS ManCo for breaching delegation rules. The probe uncovered “deficient governance, oversight and monitoring practices”. This investigation follows a wider crackdown on governance structures at ManCos in Ireland under CP86.
Ireland’s recent decision to join a global deal on corporate tax rates is expected to have a very limited impact on service providers in the asset management industry. There is no change to the 12.5% rate for firms with revenues under €750 Mln. The new deal may benefit Ireland where funds based in non-participating jurisdictions may relocate here to be in step with the international consensus.
Sources: Irish Funds, Ignites.
Download your copy of Funds, Flows & Facts – October 2021 here