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Active bond fund flows take hit in Feb

Recession arrow, Graph showing business decline on led screen

Europe’s asset management industry took a hit in net sales in February as active bond funds experienced large outflows, according to Morningstar.

Morningstar Direct’s latest data found that actively managed bond funds had outflows of €7bn during the month compared to net inflows of passive bond funds of €1.7bn.

Active equity fund inflows dropped €22.1bn to €4.3bn in February compared to passive equity funds that enjoyed net inflows of €9.4bn, of which €5.3bn were targeted equity exchange traded funds (ETFs).

Active commodity funds also had outflows of €160m and €220m for convertible funds for the month.

However, actives were the winner when it came to allocation funds which experienced €14bn in inflows compared to an outflow of €24m for their passive counterparts.

Flexible allocation funds had the highest demand for active funds with inflows of €2.8bn. Emerging market funds also saw net inflows of €1.6bn.

Morningstar director of EMEA editorial research, Ali Masarwah, said: “After enjoying a record-level of net inflows in January, European-domiciled funds faced a much more sober picture in February. Investors’ risk appetite dampened considerably as markets were hit by bouts of volatility which chipped away at the prices of risky assets across the board”.

Masarwah said the ongoing market correction was seen as a buying opportunity for investors who were optimistic on economic growth and the US fiscal reform.

“Inflows continued to target US large-cap blend funds, and it is noteworthy that investors clearly prefer the passive option in this area of the market,” he said.

The data found that there was strong demand for ETFs tracking the S&P500, with Vanguard S&P 500 ETF and iShares Core S&P 500 ETF gathering €938m and €773m of net inflows respectively.

UBS topped asset inflows during the month with net inflows of €4bn despite large outflows from its passive funds. For passive flows, iShares dominated at €3.6bn in inflows.

KBC and AXA lead the outflows list at €1.99bn and €1.4bn respectively.

The report also noted that PIMCO’s GIS Income Fund suffered its first negative month flow-wise since October 2014.



Jassmyn Goh

Jassmyn reported from Sydney to New York to Jakarta before joining Expert Investor. She was most recently Features Editor at Money Management and Super Review in Sydney.

Part of the Mark Allen Group.