Bond products were the best-selling asset class in January, according to LSEG Lipper’s European Fund Flow report, writes Christian Mayes.
The asset class pulled in a net €29.7bn in the month, while Money Market USD grouping was the best-selling Lipper Classification after receiving €11.2bn inflows. Providers of mutual funds pulled in €22.5bn, while passives saw net inflows of €21bn.
Detlef Glow, head of Lipper EMEA research at LSEG, said: “Within the current market environment, it is not surprising that European investors bought further into money market products since the Eurozone and other major economies have an inverted yield curve. This means that money market products offer a higher yield than medium- or long-term bonds.
“More generally, long-term funds and money market products enjoyed inflows for the month. These flow numbers might indicate that European investors are further readjusting their portfolios to the current market environment.”
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Equity funds attracted €2.5bn net inflows in January, while multi-asset funds suffered outflows of €11.7bn. Investors also pulled €3.6bn from alternatives and €1.8bn from real estate funds.
By fund group, BlackRock’s €7.3bn net inflow was the best-selling among fund promoters in Europe, ahead of HSBC’s €6.7bn.
JP Morgan (€6.5bn), Axa Investment Managers (€4.3bn), and BNP Paribas (€4.0bn) all also saw strong net inflows.
Geopolitical tensions
The inflows occurred against the backdrop of an unstable market environment due to the geopolitical tensions in Middle East, especially the Red Sea, which increased in January due to concerns over prolonged delivery times caused by shipping companies having to avoid the Suez channel.
Glow added: “This month was somewhat business as usual. However, it is still surprising that European investors prefer bond funds over money market products, given the inverted yield curves in the major economies around the globe.
“In addition, it is noteworthy that one of the major trends from 2023 (actively managed US equity funds faced outflows, while ETFs enjoyed inflows) continued in January 2024.”
