Bond and equity investors fled to passive fund safety in February

Europe’s asset management industry saw significantly lower net sales in February and even heavy outflows in some categories as volatility hit with active funds suffering more than passive funds.

Data from Morningstar showed that active funds sustained worse outflows than passive funds amid the volatility as investors sought exposure to equity markets through exchange-traded funds (ETFs). Flows into both equity and fixed income passive products dominated over active funds.

Actively managed equity funds saw net inflows drop from €26.4 billion in January to €4.3 billion in February, whereas passive equity funds enjoyed net inflows of €9.4 billion, €5.3 billion of which targeted ETFs.

Passive bond funds enjoyed new net inflows of €1.7 billion, compared to a €7 billion outflow for actively managed bond funds.

The bright spot for active management was in allocation funds which gathered €14 billion of inflows for the month, compared to outflows of €24 million for passive allocation funds.

Ali Masarwah, director of Europe Middle East and Africa editorial research at Morningstar, said: “While active managers largely suffered, the ongoing market correction was also seen as a buying opportunity for investors optimistic for the prospects for economic growth and the US fiscal reform.”

He added: “Inflows continued to target US large-cap blend funds, and it is noteworthy that investors clearly prefer the passive option in this area of the market.”

©2018 funds europe

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