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February in Brief:
Dazed and confused is the only way to describe the activities of fund investors in February. This was a month when markets began to lift themselves off the respective floors they hit at the start of the year. Their more positive drift was enough to forestall a steepening of January’s sales rout but it was far from sufficient to prevent another month of painful redemptions. By the end of February investors had pulled a further €18bn from their long-term funds, making for the second worst sales performance on record for the first two months of the year. And, with most bond and equity indices showing negative returns, ETFs were also caught in the fund flight.
Fixed income funds, once again, suffered the greatest damage but withdrawals were at half the pace of January. It was far from being a whitewash, though. US dollar bond products saw some traction and, of course, there was the inevitable safe-haven shift into short-term Euro-based funds. However, serious damage was inflicted on the previously popular flexible bond sector, which accounted for €5bn of the bond withdrawals. This is a sector that has been relatively impervious to previous market ructions; in the three years following January 2012 the funds that populate this sector took in over €70bn of net inflows. The tide turned in June last year and since then investors have redeemed €18bn of their holdings because their funds have failed to contain recent performance losses to acceptable levels. The latest bout of redemptions was a new low for the sector.
Equities also continued to suffer. There was some interest in thematics and some local market funds but, beyond the alternatives sector, support was lethargic. The current cry from fund selectors is ‘give me funds that are uncorrelated’. Flexible bonds were clearly failing but liquid alternative categories seemed to offer new hope. Indeed, without the alternative category, mixed asset funds would have endured a second month of redemptions. Read more
European Fund Market - Data Digest
Broadridge's annual review of the European funds industry provides 30 pages packed with sales and assets data on activity in different markets, as well as a look at which groups and products prospered in 2015. The report includes unique data on cross-border activity, as well as commentary on various issues that impact the industry over the near term and long term + a special focus on US funds and ETFs distribution (page 26-32).
You can view the report by clicking here