The European mutual fund industry got off to a strong start in 2015, enjoying net inflows of €25.7bn throughout January. According to Lipper, multi-asset funds benefited the most from recent inflows while money market funds had a comeback, booking €17.5bn in net inflows.
The strong data follow relatively weak performance throughout December, when money market funds in particular saw around -€17bn in outflows and inflows into multi-asset funds were just above €10bn.
Christian Dargnat, president of the European Fund and Asset Management Association (Efama), argues that relative, rather than absolute returns, prudential regulation of banks and investors requirements are three reasons for the continuing popularity of money market funds.
“… The direction in which regulation of banks is evolving appears favorable to money-market funds. The new prudential regulation of banks (liquidity coverage ratio(LCR) and net stable funding ratio (NSFR)) encourage banks to hold assets with a maturity of greater than one year on their balance sheets” Dargnat adds.
Detlef Glow, head of Lipper EMEA Research cautions that investors shouldn’t attach too much importance on short term comparisons between mutual and money-market funds as the latter are by definition subject to more volatility.
“In the long run, the interesting development is the growing popularity of multi-asset funds and equity funds, which, particularly in Germany is heavily dividend driven. As we are approaching the traditional season of dividend payouts from April to June, I expect that more investors will select equity or multi-asset funds” Glow predicts.