European Funds Record €48.4bn Inflows in July as Fixed Income Strategies Surge
21 AUG, 2024
By Jose Luis Palmer from RankiaPro Europe
European-domiciled funds saw a significant boost in July 2024, gathering €48.4bn in net inflows, the highest monthly figure since January 2023. This surge was driven by a strong demand for fixed-income strategies, which marked their best performance in five years, according to Morningstar's latest Asset Flows report.
Fixed Income Funds Lead the Surge
Fixed income strategies were the standout performers in July, attracting €42.6bn of net inflows. This marks the highest inflow into bond strategies since June 2019 and accounted for 88% of the month’s total inflows. Active fixed income funds were particularly strong, netting €32.7bn, with Asian local currency bonds contributing €6.8bn. Passive fixed income funds, by comparison, garnered €9.9bn.
Antje Schiffler, editor at Morningstar, commented on the trend, highlighting the growing interest in fixed income due to changing market conditions.
Active fixed income strategies have been particularly appealing, especially those with exposure to Asian local currencies, as global investors seek diversification amid volatility in other markets.
Antje Schiffler, editor at Morningstar
Equities and Sustainable Funds Experience Mixed Results
While fixed income dominated inflows, equity funds showed more moderate results. Total net inflows into equity funds reached €10.1bn, but passive equity funds, with €12.5bn, were responsible for the growth, as actively-managed equity strategies saw outflows of €2.5bn.
Sustainability-focused Article 8 funds recorded €20.5bn in inflows, the highest so far in 2024, reflecting increased investor interest in sustainable investing. Conversely, Article 9 funds, which have been struggling, posted their 10th consecutive month of outflows, losing €797m in July.
Global large-cap blend equity funds topped Morningstar's categories for the month, bringing in €13.9bn in net inflows. However, Japanese large-cap equity strategies suffered the steepest losses, with €3.3bn in outflows due to underperformance linked to the unwinding of the yen 'carry trade'. Despite challenges in certain markets, total assets in long-term European funds reached €11.98trn by the end of July, up from €11.9trn in June.
Overall, European funds have seen €188.7bn in net inflows since the start of 2024, with July alone contributing more than a quarter of the year’s total flows.
