In February 2024, European long-term funds experienced an influx of €19.4 billion, building upon January’s acquisition of €24.9 billion, according to Morningstar’s European Asset Flows data and commentary for February 2024.
Investor interest in equities and fixed-income strategies remained strong in February 2024, buoyed by optimism over potential interest-rate cuts. The European equity markets surged by 1.75% during the month, as per the Morningstar Europe NR EUR Index.
Equity funds marked a second consecutive month of inflows, with €5.1 billion flowing in. Passive equity funds dominated the scene, attracting a substantial €19.1 billion, while actively managed products faced net outflows of €14 billion.
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Fixed-income strategies remained in favor, attracting €30.9 billion in February. Within this segment, active managers drew in €25.9 billion, while index funds gathered over €5 billion.
Despite major central banks maintaining policy rates, market attention turned to anticipation of rate cuts, particularly after mid-March’s release of stronger-than-expected US inflation data, dashing hopes for a Federal Reserve interest-rate cut before June.
Allocation and alternative strategies continued to witness outflows, with €9.93 billion and €1.98 billion, respectively. Commodities funds also faced negative sentiment, experiencing nearly €1.23 billion in net outflows.
Furthermore, money market funds registered outflows of €9.4 billion, marking the first negative month since June 2023.
In the fund landscape, long-term index funds stood out, posting inflows of €22.9 billion, while actively managed funds saw net outflows of €12.9 billion.
Assets in long-term funds domiciled in Europe increased to EUR 13.088 trillion by month’s end from €12.899 trillion at the end of January.
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A noteworthy trend emerged within the scope of the Sustainable Finance Disclosure Regulation: funds categorised under Article 8 experienced net inflows for the second consecutive month, whereas Article 9 funds (“dark green” strategies) witnessed outflows of €2.1 billion in February.
Global large-cap blend equity led as the best-selling Morningstar Category, trailed by fixed-term bond funds. Conversely, other allocation and sector-equity ecology thematic funds experienced the highest net outflows at the category level, followed by EUR flexible allocation global.
