Down but not out: EFAMA reveals extent of 2011 outflows

Investment fund assets in Europe fell €230 billion between 2010 and 2011, according to the European Fund and Asset Management Association's annual review of fund flows.

The decrease amounts to a 2.8% fall between the two years, with Ucits particularly hard hit. The net assets of Ucits fell by 6.2% (€376 billion) between the two periods of analysis.

Meanwhile, non-Ucits saw assets increase by 6.8% (€146 billion) over the course of 2011. This demand was said to be driven by insurance companies, pension funds and other institutional investors.

Money market funds were shown to have experienced outflows over 2011, with €33 billion withdrawn. However, this was less than the €122 billion withdrawn in 2010.

Demand and turbulence

Also in the figures, EFAMA said long-term Ucits experienced a sharp decline in demand, which saw outflows of €55 billion in 2011 compared to inflows of €290 billion a year earlier.

EFAMA said the switch from inflows to outflows appeared most readily in August – the time of the US credit downgrade and the heightening of the eurozone sovereign debt crisis. This led to strong withdrawals from equity, bond and balanced funds.

Taking a decade-long view, EFAMA said combined Ucits and non-Ucits assets had increased by 72% between 2001 and 2011. And, the figures at the end of 2011 are 28% higher than the end of 2008 – a comparable financial crisis.

Included in the figures was the fourth quarter data for 2011, covering the period October to December 2011. This showed that total assets of Ucits rose 2.9% between the third and fourth quarter of the year.

The report also stated how cross-border funds have continued to grow. This is evidenced by Luxembourg and Ireland accounting for 45.8% of the Ucits industry at the end of 2011, which is an increase from 43.9% in 2010.

Peter de Proft, director general of EFAMA, said: ‘Total investment fund assets represented 63% of the European Union’s GDP at end 2011. This confirms the important contribution of investment funds as financial vehicles raising capital from retail and institutional investors, and providing funding to other sectors including monetary financial institutions, non-financial corporations and government agencies.’