Morningstars latest Asset Flow Commentary Europe, reveals that sales of long-term funds in Europe picked up markedly in January as the so-called reflation trade gained traction in capital markets worldwide. Hopes on stronger economic growth drove up net flows into open-end funds to EUR 33.5 billion, according to Morningstar’s estimates, the high est level seen in a one-month period since July 2015. Bond funds carried the day, enjoying inflows of EUR 17.19 billion; allocation funds raked in EUR 7.29 billion, their highest one-month tally since July 2015. Alternative funds pulled in a robust EUR 3.14 billion.
While the inflows of EUR 3.36 billion into open-end equity funds may seem unspectacular at first, a deeper look reveals that actively managed funds took in the lion’s share of those inflows, enjoying net new money of EUR 2.75 billion during the month. This is in stark contrast to the flow picture of equity funds in 2016 when they suffered gargantuan outflows of EUR 86.04 billion in 2016 and last witnessed higher inflows in October 2015. (Equity ETFs, which are not part of this statistic, added another EUR 6.9 billion to their tally in January.)
Despite strong inflows to long-term funds, investors still seem to be wary of committing all of their assets into risky securities. This is evident in the continued popularity of money market funds: They saw staggering inflows of EUR 30.54 billion, making January 2017 the third-strongest month on record since Morningstar started collecting asset flow data on an industry level in Europe in 2007. Almost all of these flows (EUR 29.78 billion) were sent to money market funds domiciled in France.
