Europe suffers outflows across all asset classes in July

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Equity investors withdrew funds to the tune of 11.6 billion euros in July, the fifth consecutive negative month for the asset class, as the war in Ukraine and market turmoil continued to weigh on investor sentiment .

Funds domiciled in Europe lost a total of 25.1 billion euros over the month.

According to Morningstar, the withdrawals reflected ongoing concerns about high inflation, soaring energy prices, rising interest rates, supply bottlenecks and the threat of recession.

This follows European-domiciled funds which recorded their worst month on record for flows since March 2020, in June.

Global large-cap growth was the hardest hit of any Morningstar category, with both active and passive vehicles seeing exits. Previously, passive equities regularly attracted new capital.

Fixed Income Dominates ETF Flows in July

Elsewhere, bond funds lost 2.3 billion euros during the month, making it the sixth consecutive negative month for the asset class, which Morningstar said was attributable to the withdrawal of active offers .

Passive fixed income securities were the only major group to post positive net inflows. Within this group, US and EU government and corporate bonds posted the largest gains.

Commodity funds saw the largest outflows as a percentage of assets under management, with outflows totaling 4.7% of June assets, or 6.9 billion euros.

“This result reflects the fact that commodity markets appear to have calmed down after the month-long bull run,” the report said.

“Agricultural prices fell 7.4% in July and metals plunged 13.4% (due to losses in tin, iron ore, copper and nickel). Even the energy complex (excluding European natural gas) eased as crude oil fell 10% month-on-month, according to the World Bank.

Flows into sustainable strategies slow as equities continue to suffer

Traditional diversified allocation funds lost €2.3 billion, its second month of outflows, after a flurry of positive flows that began in April 2020.

Investors continued to pour funds to the tune of €6.3 billion into the dark green Article 9 funds, with active and passive strategies attracting new funds. Meanwhile, light green Article 8 funds lost €3.3 billion on the month continuing a trend that began in February, with active strategies making up all of the exits.

In terms of fund providers, Eurizon and BNP Paribas led the month’s flows, while Amundi suffered the biggest redemptions.

Top sellers included Xtrackers ESG MSCI USA UCITS ETF, while iShares Physical Gold ETC saw the largest net outflow of €1.8 billion.

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