Despite the extreme volatility seen at the start of August, investors continued to show positive sentiment, arguably driven by hopes of interest-rate cuts, and poured EUR 40.2 billion into long-term Europe-domiciled funds. This resulted in the second-best monthly flows in 2024 so far, bringing total net inflows to EUR 243 billion in the year to date.
August was an eventful month for investors as stock markets endured a significant bout of volatility in the first week, amid worries about a US recession and the implications of a sharply strengthening Japanese yen. However, fears subsided as the month progressed, and global equities were able to gain 2.5% in the month (in US dollars), while global government bonds returned 1.0% (US dollars, hedged).
Investors Buy Bond And Passive Equity Funds
In this context, investors showed positive sentiment on stocks, with even more enthusiasm than last month: Equity funds took in EUR 16.7 billion, their second-best monthly result in terms of flows since January 2022. This was a one-sided story, with passive strategies taking in EUR 19.3 billion of net inflows in the month, while active equity funds shed EUR 2.6 billion, marking the 17th month of net outflows over the past 18 for active equity strategies. (May 2024 was the only positive month.)
Bond funds, for their part, attracted EUR 26.9 billion of net new subscriptions in August, the 21st month of positive flows out of the last 22. Both active and passive strategies shared the spoils, with EUR 21.1 billion and EUR 5.8 billion of net inflows, respectively.
Allocation strategies continued to bleed assets, with EUR 3.0 billion of net outflows in August. Allocation strategies have had only one positive month in terms of flows since December 2022. Meanwhile, alternative funds returned to positive territory with EUR 663 million of net inflows in the month. This asset class has experienced only two positive months in terms of flows since May 2022.
On the other hand, commodities funds shed EUR 299 million, which owed to the EUR 240 net million withdrawn from broad basket products and the EUR 120 million from precious metals exchange-traded commodities.
Finally, money market funds had EUR 62 billion of new subscriptions, their strongest monthly result since October 2022.
Active Vs Passive Management
Long-term index funds recorded inflows of EUR 24.7 billion in August, compared with 15 billion raised by actively managed funds. (The table below includes only the major category groups).
The market share of long-term passive funds stood at 28.8% in August 2024 from 25.5% in August 2023. When including money market funds, which are the domain of active managers, the market share of index funds stood at 25.1% from 22.3% 12 months earlier.
Purest ESG Strategies See Outflows
Funds falling within the scope of Article 8 of the Sustainable Finance Disclosure Regulation had net inflows of EUR 8.3 billion in August, the fourth consecutive positive month in terms of flows. Global large-cap blend equity and USD flexible-bond funds were the main drivers. At the same time, funds falling under Article 9 (“dark green” strategies) shed EUR 587 million, marking their 11th consecutive month of net outflows.
From an organic growth perspective, Article 8 funds showed a 1.29% organic growth rate for the year to date. On the other hand, products in the Article 9 group saw a negative 3.97% organic growth rate over the same period. Between January and August, funds not considered to be Article 8 or Article 9 according to the SFDR had average organic growth rates ranging from 0.75% to 4.87%.
Winners And Losers Among Asset Managers
Below are the ten fund houses that raised the most and the least in Europe in August 2024, with detail between passive and active management (money market funds excluded).
Find out which categories, funds and companies experienced biggest inflows and outflows. Click here to download the full report.
Data Notes
The figures in this report were compiled on Sept. 17, 2024, and reflect only the funds that had reported net assets by that date. Approximately 31,300 Europe-domiciled open-end funds and exchange-traded funds that Morningstar tracks from more than 2,900 fund companies across 36 domiciles were included. Organic growth rate is flows as a percentage of beginning assets.
Methodology
Morningstar computes flows using the approach that is standard in the industry: Estimated net flow is the change in assets not explained by the performance of the fund. Our method assumes that flows occur uniformly over the course of the month. Adjustments for mergers are performed automatically. When liquidated funds are included, the final assets of the fund are counted as outflows. Reinvested dividends are not counted as inflows. We use fund-level reinvestment rates to improve accuracy in this respect. We make ad hoc adjustments for unusual corporate actions, such as reverse share splits, and we overwrite our estimates with actual flows if managers are willing to provide the data to us.
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