Open-end equity funds saw the largest outflows in the year, recording their worst annual outflows since 2008 with a loss of EUR 76.1 billion. Allocation and alternative funds received modest net inflows of EUR 30.6 billion and 38.7 billion, respectively. Bond funds garnered inflows of EUR 80.1 billion, supported by investors' willingness to chase yields in a market heavily influenced by the policies of the European Central Bank.
Further findings from Morningstar’s fund flows report for December include:
- Despite modest inflows, assets under management of long-term open-end funds rose 5% on the year to a new all-time high of EUR 6.81 trillion;
- Money market funds, offering safety but no return in times of zero interest rates, took in EUR 111.7 billion in 2016, the highest level of any calendar year since Morningstar began asset flows data collection for Europe;
- European large-cap blend equity funds saw heavy net outflows of EUR 19.5 billion: actively managed funds in the category posted outflows of EUR 20.7 billion, while open-end index funds enjoyed net inflows of EUR 1.3 billion;
- UK large-cap blend funds and funds investing in large-cap stocks outside the UK were affected by the vote for Brexit, with most outflows exiting UK-distributed funds in the second half of 2016;
- Eurizon led the providers in Europe with the highest 2016 inflows of EUR 13.4 billion, largely supported by the firm’s allocation and fixed-income offerings;
- Franklin Templeton saw the highest outflows for the year, at EUR 22.6 billion;
- BlackRock moved from being the strongest asset gatherer in Europe in 2015, to experiencing outflows of EUR 6.6 billion in 2016;
- Among Europe’s largest open-end funds, PIMCO GIS Income and Nordea Stable Return were the two fastest growers in 2016, with organic growth rates of 66% and 131%, respectively;
- Sweden’s AP7 Aktiefond ended the year as Europe’s largest fund, with assets under management now at EUR 32.9 billion;
- Within equity funds, passive assets finished 2016 at 24.9% of the market share.
Ali Masarwah, EMEA Editorial Director for Morningstar, comments:
“Several events and trends reduced investors’ appetite to commit fresh money to European mutual funds, starting with worries early in the year about global economic growth, to the Brexit vote in June, and the uncertainty regarding the US election in the autumn. Interestingly, the November equity rally prompted by the election of Donald Trump as US president failed to generate an enthusiastic turnout among European open-end fund investors. Flows into equity funds picked up only modestly, while several bond Morningstar categories sold off in the last two months of the year. However, despite the heavy redemptions, 2016 will not go down in the history books as an annus horribilis of the active European fund industry. Although inflows over the year were modest, assets under management of long-term open-end funds in fact rose to an all-time high of EUR 6.81 trillion, up 5% on the previous year. This also holds true for equity funds, which enjoyed a modest increase in assets.”