Record-breaking European flows puts US in the shade

Inflows to European-domiciled funds hit a record high in the first half of 2017 at the expense of their struggling US counterparts, according to the latest data from Morningstar.

Record-breaking European flows puts US in the shade

The first half of 2017 saw ‎€285bn of fresh assets flood into European-domiciled open-end funds, a new record high for net inflows over six months for funds on the continent Morningstar said.

Fixed-income funds were the main beneficiary, totting up another record with net inflows of €152.2bn in the first half of the year.

However the huge flows into Europe, where €53.4bn was invested in June alone, came at the expense of US funds whose popularity plummeted.

The US large-cap blend equity, mid-cap equity, large-cap value equity and large-cap growth equity sectors had some of the largest outflows in the year to date, and the country has fared little better at fund level.  

The Fidelity American fund has had outflows of €1.9bn in 2017 so far with underperformance and management changes resulting in a loss of 21% of the assets the fund had at the start of the year.

At a provider level, Generali, Aletti Gestielle and Standard Life Investments also suffered with large outflows of €2.9bn, €4bn and €3.7bn respectively in 2017 to date.

Those benefitting from the popularity of Europe included PIMCO, which has had €27bn inflows since the start of 2017 and saw its GIS Income strategy become Europe’s largest fund.

BlackRock benefited from strong interest in European bonds with more than half of its €2.8bn inflows entering its fixed-income products in June alone.

Invesco Perpetual’s Pan European High Income fund also saw a lot of interest with inflows of €503m in June, pushing its total assets past the €9bn mark for the first time.

The record-breaking flows for Europe came on the same day a flurry of positive economic data from Europe hit headlines.

A number of European countries grew their economies in the last quarter with French GDP up 0.5%, Spanish up 0.9%, Austria 0.8% and Sweden an impressive 1.7%.

The European Commission’s economic sentiment index also revealed confidence was at the highest since the financial crisis of 2008, making clear recovery on the continent is very much here.

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