Long-term UCITS experienced a sharp decline in demand in 2011 with net outflows of EUR55 billion in 2011, against net inflows of EUR290 billion in 2010, according to the latest statistical information from the European Fund and Asset Management Association (EFAMA). This reversal started in August when the downgrading of the US government debt and the euro crisis unraveled financial markets, leading to strong withdrawals from equity, bond and balanced funds, said EFAMA.
The association’s latest statistical release describes trends in the European investment fund industry for the fourth quarter and overall in 2011.
In terms of asset growth and net sales in 2011, investment fund assets in Europe decreased by 2.8% to EUR7,920 billion: overall, net assets of UCITS decreased by 6.2% to EUR5,634 billion, after registering net outflows of EUR88 billion during the year. Net assets of non-UCITS increased by 6.8% to EUR2,286 billion, on the back of continued strong net inflows into special funds (EUR 101 billion).
Intense competition from the banking sector affected demand for money market funds, noted EFAMA. These funds continued to record net outflows in 2011, albeit less than in 2010 (EUR 33 billion compared to EUR 122 billion).
Strong demand for non-UCITS continued in 2011: special funds attracted EUR 101 billion in net new money throughout the year, as insurance companies, pension funds and other institutional investors continued to use these vehicles to invest the recurrent contributions collected from their members. This compares against net inflows of EUR 145 billion in 2010.
Overall, the bouyant cross-border fund business continued to grow in 2011, said EFAMA. The market share of Luxembourg and Ireland in the UCITS industry increased to 45.8% at end 2011, compared to 43.9% a year earlier. Total net sales of UCITS domiciled in Ireland alone recorded EUR 62 billion in 2011.
In its latest statistics, EFAMA noted strong growth over the last decade: UCITS and non-UCITS assets at end 2001 stood at EUR 4,617 billion. Total assets of investment funds stood at EUR 7,920 billion at end 2011. Total assets at end 2011 stood 72% higher than at end 2001 and 28% higher than at end 2008 during the midst of the financial crisis.
Peter de Proft, director general of EFAMA, commented: Total investment fund assets represented 63 percent of the European Unions 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.
(JDC)