In October 2023, long-term funds domiciled in Europe experienced significant net redemptions, amounting to €43.2 billion.
This marked a cautious response from investors amid economic uncertainties and the impact of geopolitical tensions, particularly the Israel-Hamas conflict.
The period saw global stocks decline for the third consecutive month, dropping by 3.0% in US dollar terms, and global government bonds decreased by 0.6% in hedged US dollar terms.
These market shifts were largely influenced by escalating geopolitical risks in the Middle East, as outlined in Morningstar’s European Asset Flows commentary.
Valerio Baselli, Senior International Editor at Morningstar, noted the surge in money market funds, which attracted €40 billion in net inflows, driven by the conflicts in Palestine and Ukraine that dampened risk appetites and increased the demand for cash.
Equity funds witnessed the most significant outflows in October, with investors withdrawing €20.4 billion. Passive equity funds, however, saw €6.5 billion in net inflows. After a continuous period of positive inflows, fixed-income strategies faced €3.8 billion in net redemptions. Allocation and alternative funds also experienced net outflows, totalling €11.8 billion and €3.9 billion, respectively.
Article 8 funds saw €25.3 billion in outflows, while Article 9 products had €2.6 billion in outflows, albeit maintaining a positive organic growth rate year to date. The U.S. large-cap blend equity category remained a top choice for investors, while global emerging-market equity funds recorded the highest category-level net outflows at €3.6 billion.
iShares regained the lead among asset gatherers for the month, followed by Legal & General and BBVA. DNB, Aviva, and UBS emerged as the largest laggards. The iShares $ Treasury Bd 20+yr ETF experienced inflows of €1.8 billion, while DNB Global faced €2.2 billion in net redemptions.
The total assets in long-term funds domiciled in Europe fell to €10.380 trillion at the end of October, down from €10.790 trillion at the end of September, indicating a decrease in the region’s overall asset value.
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