Firms selling Ucits and alternative investment funds are experiencing a downturn linked to the dire international economic situation, the war in Ukraine and the lockdown in China. Investor demand for these types of funds has dropped sharply, according to the European Fund and Asset Management Association (Efama), who released figures showing that net assets of Ucits and AIFs have declined by 4.5% this past quarter.
Efama announced the figures on 9 June as it published its European Quarterly Statistical Release for Q1 of 2022.
“Unsurprisingly, investor demand for Ucits dropped sharply in the first quarter of 2022 due to the combination of several factors: the war in Ukraine, the lockdown in China, the rise in inflation, and the lack of positive signals from policymakers, as central banks have no choice but to raise interest rates and the leeway for governments to provide fiscal support is now severely constrained by large budget deficits,” said Bernard Delbecque, Senior Director for Economics and Research at Efama.
Detailed breakdown
Ucits recorded net outflows of EUR90 billion, compared to significant net inflows of EUR 238 billion in Q4 of 2021. The outflows were concentrated in Ucits bond funds and money market funds (MMFs), which recorded large net outflows of EUR 50 billion and EUR 119 billion each.
Ucits multi-asset funds continued to record “robust sales”, according to Efama, with EUR 56 billion, up from EUR 50 billion in Q4 2021. Ucits equity funds were down, but still recorded net inflows of 24 billion, down from EUR57 billion in Q1 2021.
Equity AIFs hit
Net outflows in AIFs surged by EUR 14 billion over their EUR 5 billion level Q4 2021. The highest outflows were found in AIF equity funds, which rose to EUR 42 billion, up from EUR 18 billion in Q4 2021.
Both AIF bond funds and AIF multi-assets recorded net inflows (EUR 6 billion and EUR 12 billion, respectively, with multi-assets up from EUR 7 billion in Q4 2021), Efama described the bonds inflow as “modest”. AIF MMFs suffered small net outflows at EUR 5 billion.
At the end of its release, Efama included the more optimistic line that “European households’ net purchases of investment funds stayed at a high level” – but in Q4 2021, prior to the downturn. The statistic for the last quarter of last year was EUR 52 billion, with the year-long 2021 figure at EUR 245 billion.
Efama releases its quarterly statistical release to present net sales and net assets data for Ucits and AIFs in 29 European countries (the EU27 except Croatia, Estonia, Latvia and Lithuania), plus Switzerland, Turkey, the UK, Liechtenstein, and Norway.