Posted inAbsolute ReturnMulti Asset

Multi-asset fund flows hit two-year high

Inflows into multi-asset funds by European investors have exceeded €10bn for three consecutive months now, reaching €16.4bn in May. This is the highest net monthly inflow since April 2015.

The inflows have come as multi-asset funds have recovered from a difficult 2015 (see graph below), when the funds’ volatility inched up to previously unseen highs. Over the past year, performance improved and multi-asset funds made returns of approximately 11%.

These better performance figures have resulted in stronger net inflows: over the past year, they amounted to €84bn, far outpacing net flows into both equity and bond funds.

But many fund selectors haven’t had a lucky hand in selecting the right funds. The best-selling multi-asset fund over the period has been the Nordea Stable Return fund. Even though it soft-closed last September after a period of strong performance, the fund still saw €5.1bn in net inflows over the past year. But it only made a return of 0.32%, placing the fund in the lowest performance decile.

The second-best seller (+€4.5bn), the Allianz Income & Growth fund, did quite a bit better, generating a net return of 12.9%. This was helped by its attractive management fee of just 0.84%.

Concentrated flows

Investors in Italy and Germany, two countries known for their conservative investor base, have been responsible for the bulk of the flows into multi-asset funds year-to-date.

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In the first four months of 2017, German investors were responsible for a third of all flows into the category, committing a net €13bn to multi-asset funds (according to the German asset management association BVI). This is more than three times the amount they chipped in during the whole of 2016.

Italian investors also have committed large sums of money to multi-asset funds this year. Until May, flexible and balanced funds saw €15bn in net inflows, according to figures from the Italian asset management association Assogestioni.

Part of the Bonhill Group.