Multi-asset funds fall from favour

2023 saw the first net outflows for multi-assets funds since 2008 according to data on European fund flows.

In total, multi-asset UCITS funds saw net outflows of €103 billion in 2023, compared to net inflows of €14 billion, the previous year.

The data, provided by the European Fund and Asset Management Association (Efama) showed a turnabout in fortunes for most fund classes. UCITS funds and AIFs experienced €304 billion in net inflows in 2023, compared to €273 billion in net outflows suffered in 2022.

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2023 was particularly good for equity and bond funds. Both enjoyed net inflows in 2023, in contrast to the previous year when investors pulled their capital.

In 2023, equity fund net sales were helped by large inflows for equity ETFs, which drew in €101 billion in net new money, while non-ETFs saw net outflows of €94 billion.

Meanwhile bond funds enjoyed a recovery in 2023 after interest rate increases in 2022 led to €127 billion net outflows for UCITS bond ETFs. A stabilisation of rates plus the expectation that the US Federal Reserve will make further rate cuts in 2024 has led to €137 billion in net inflows.

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Money market funds also enjoyed a good year in 2023 with €172 billion of net new money during 2023, the second highest of the decade, second only to pandemic year 2020.

“In 2023, the high level of interest rates and the more gradual tightening stance spurred significant net inflows into money market funds and bond funds,” said Bernard Delbecque, senior director for economics and research at Efama.

“Concurrently, net sales of actively managed equity funds experienced a lack of investor demand, whereas ETFs took the forefront in driving net sales within the equity fund landscape”.

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