The first 5 months of this year were not short of continuing change nor unforeseen events. Bank rescues were suddenly back in town and the investment environment continues to provide headaches, as investors are recalibrating how to best position their portfolios. On an overall basis, investor risk appetite has much changed, with a lot of flows going to money market and fixed income funds. However, a deeper analysis provides a much more heterogenous picture than many headlines suggest.
Challenges are not limited to the buy-side only, but also apply to asset managers alike. In this context, Stephen Cohen, BlackRock's head of EMEA stated during a conference in London in June that “investors can now reap returns from cash or government bonds of up to 6%.”Cohen continued saying that “the bar has been raised for asset managers, which must come up with portfolios that can get a return.”
But how did fund flows fare so far this year? In terms of fund category net sales numbers, Global Large-Cap Blend Equity continues to dominate fund category flow leaderboards, also in May, QTD and YTD. Within the first 5 months of the year, the category attracted net inflows of EUR 36 billion. Fixed Term Bond, mainly driven by captive players, stays ranked 2nd in all of the 3 timeframes with YTD inflows of EUR 27 billion. Global EM Equity remains ranked at #3 on a YTD basis, but lost some relative momentum last month. Also, EUR Government Bond and EUR Corporate Bond continue to post strong net sales numbers. In terms of notable recent jumps, Japan Large-Cap Equity stands out. Value Equity, however, to the surprise of many, does not get any traction. Quite the opposite.
Chart: Best selling fund categories YTD
Chart: Worst selling fund categories YTD
Looking at asset managers, iShares comfortably remains in the lead with net sales worth EUR 28 billion in the first 5 months, more than double those of second ranked Vanguard (EUR 13 billion). Swisscanto ranks third, followed by BlackRock (its active book), M&G, Xtrackers and PIMCO. M&G? Yes M&G, the group that was rather prominently positioned in the group of the worst-selling asset managers in Europe during the last 5 years. In fact, the UK asset manager a spectacular turnaround in fund flows.
Chart: Best-selling AMs YTD
M&G’s comeback has been much supported by strong fund performance. Around 50% of M&G funds are ranked in the first peer quartile - over one, three and also five years. YTD, its Asian Corporate Bond Fund took in EUR 1.9 billion in new money, followed by its Total Return Credit Investment Fund (EUR 1 billion) and its sustainable version (EUR 802 million). However, its Japan fund should also be mentioned with inflows of wEUR 479 million.
In terms of best-selling funds this year so far, the PIMCO GIS Income Fund took the lead with net sales worth EUR 5 billion, followed by the AB American Income Portfolio (EUR 3.2 billion) and Goldman Sachs’ Enhanced Ind Sustainable Glob Equity Fund (EUR 3.2 billion).
It is a fascinating environment. New winners are emerging. Assuming it is all about proposition and performance only falls short. It takes much more to win fund buyers attention and ultimately flows nowadays. accelerando’s H1 2023 European Fund Distribution Review & Outlook with full H1 data will be released on the 25th of July, providing a fast-paced, yet very granular read on fund flows, trends and drivers behind including all key stats, many off-piste observations and true forward thinking.