Rising risk appetites and robust economic growth are driving flows towards European asset managers, according to research by Bank of America Global Research.
So far this year, asset managers across the continent attracted positive inflows of $54 billion (€50.5 billion) as markets rallied around slower-than-expected rate rises and lower inflation figures.
This was driven by inflows into fixed income markets, with $32 billion (€29.9 billion) flowing into the space.
Bank of America analysts noted the improved attractiveness of investment-grade bonds, while demand for European corporate bonds is also high.
Asia, China, emerging markets and ESG themes have also attracted attention from investors this year.
The positive flows into European managers mark a change in fortunes from last year, where total net outflows for the year stood at $320 billion (€299.4 billion).
Bank of America researchers said: “After significant outflows in 2022, we expect a rebound in 2023. But we expect organic growth to be below its long-term average of 3-4%, given rate and recessionary pressures.”
The European asset management sector last witnessed net outflows in 2011.
In early February, the European Central Bank upped rates on its main refinancing operations, the interest rates on the marginal lending facility and the deposit facility, increasing them to 3.00%, 3.25% and 2.50%, respectively, with effect from 8 February 2023.
But other indicators point towards stability – a driver of flows towards European fixed income markets.
S&P Global’s flash Composite Purchasing Managers’ Index (PMI), often viewed as a good assessment of overall economic conditions, rose to 50.2 in January from 49.3 in December – the first time it has been above 50 since June.
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