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ETF flows resist wider funds industry redemptions

ETF_promotingInvestment funds in Europe saw billions of euros in outflows in September - but exchange-traded funds (ETFs) and similar products stood firm.

Overall net outflows of €22 billion from investment funds were recorded in September, according to recent data from the European Fund and Asset Management Association (Efama).

But data that is only focused on ETFs - published recently by ETFGI - showed September sales of ETFs had increased, with net inflows of $6.5 billion (€5.6 billion) building on August’s inflows of $2.96 billion.

According to the Efama data, the sharp fall in sales of investment funds – including active and passive funds - in September included even the most persistently selling asset class: multi-asset funds, which saw redemptions of €1 billion.

The net outflows from the funds industry more than wiped out the €20 billion that investors placed in funds during August and even though equity and alternative funds saw positive sales, their figures were down on the previous month.

Bernard Delbecque, senior director for economics and research at Efama, said “mounting political and trade tensions and pressure on interest rates” were behind the redemption wave.

The €22 billion of total outflows shown by Efama were primarily in bond and money market funds regulated under the EU’s Ucits rules.

Bond funds saw redemptions of €10 billion - more than in August when the asset class had €2 billion of outflows - and Ucits money market funds saw redemptions of €21 billion.

The bond outflows again stand in contrast to ETF inflows. The ETFGI data, which was published in October, showed fixed income inflows to European-listed ETFs were the equivalent of €1.8 billion during September.

But Efama’s data did not carry bad news about all asset classes – at least not quite. Equity funds had €4 billion of subscriptions in September – although this was down by €1 billion on the month-before figure – and alternative funds saw net inflows of €9 billion – but, again, this was down by half compared to August sales.

When alternative funds are taken out of the total figures, Ucits overall saw outflows of €32 billion (and €11 billion when money market funds are excluded) against inflows of €2 billion the month before.

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