Bond funds were firmly in favour with European investors in April, the latest Morningstar data shows, with fixed-income funds attracting €27.2 billion. It is the third-best month for fixed-income funds since July 2017. Actively managed funds, meanwhile, continued to suffer at the hands of their passive rivals, including index funds and ETFs. But when it comes to bonds, investors still prefer an active fund.
Equity funds remained in the doldrums in April, despite a decent performance for stocks in the month. Outflows from equity funds hit a hefty €11.2 billion, but this is still considerably less than the €18.1 billion of net redemptions suffered by the sector in March. Mixed asset funds returned to favour after a long stretch of net redemptions: April netted €2.2 billion, the first positive month for the category since September 2018.
Index funds – including both open-ended tracker funds and ETFs – raked in €9.5 billion in April, accounting for 43% of all net inflows sent to funds domiciled in Europe. Excluding money market funds, inflows to index funds accounted for an incredible 81% of all European fund inflows. As at April 30, the market share of index funds stood at 17.7% of Europe’s long-term fund market, compared with 16% just a year ago.
The current predicament of actively managed equity funds is the clearest sign of the crisis of confidence that active asset managers are experiencing. Passive equity funds raked in €2.9 billion in net new money in April, while their actively managed equivalents shed €14.2 billion. In the previous 12 months, equity index funds enjoyed inflows of €25.4 billion, while actively managed equity funds suffered outflows of €68.5 billion. This divergence is reflected by the rising share of index equity funds in Europe. At April 30, equity index funds account for 28.2% of all equity funds’ assets in Europe, up from 26.4% one year earlier.
Conversely, actively managed bond funds garnered inflows of €20 billion – more than in any month since January 2018. In absolute turns passive bond funds saw substantially lower inflows – €7.2 billion – but the growth rate relative to their size was double that of actively managed bond funds. In the past 12 months, passive bond funds enjoyed an organic growth rate of 17.7% versus -1.2% for actively managed funds.
Categories - Leaders
Global flexible bond. eg. PIMCO GIS Income
Emerging markets bond fund
Euro corporate bond funds
Categories - Laggards
Eurozone large-cap equity funds
Multi-strategy funds. eg. SLI Global Absolute Return
Equity funds exposed to Hong Kong
Fund Providers - Leaders
PIMCO
Royal London
iShares
Amundi
Fund Providers - Laggards
Fundsmith
Invesco - outflows from Europe and UK large-cap equity products
Lyxor S&P 500 ETF
UBS eurozone large-cap equity index funds