Massive flows in August as investor optimism defies…

Investors buy bond funds and passive stocks

Against this background, investors showed positive sentiment towards equities, with even more enthusiasm than last month: equity funds took in €16.7bn, their second best monthly result in terms of January flows 2022. It was a one-sided story, with passive strategies taking in €19.3 billion of net inflows this month, while active equity funds shed €2.6 billion, marking the 17th straight month of net outflows in the last 18 for active equity strategies. (May 2024 was the only positive month.)

Bond funds, meanwhile, attracted €26.9bn of net new subscriptions in August, the 21st month of positive flows out of the last 22. Both active and passive strategies shared the gain, with 21.1 EUR billion and EUR 5.8 billion of net inflows. , respectively.

Allocation strategies continued to destroy assets, with net outflows of €3.0 billion in August. Allocation strategies had only one positive month in terms of flows since December 2022. Meanwhile, alternative funds returned to positive territory with €663m of net inflows this month. This asset class has seen only two positive months in terms of flows since May 2022.

Commodity funds, on the other hand, lost €299m, due to €240m net withdrawals from broad basket products and €120m from precious metals exchange-traded commodities.

Finally, money market funds had €62 billion of new subscriptions, their strongest monthly result since October 2022.

Active vs passive management

Long-term index funds saw inflows of €24.7bn in August, compared to €15bn raised by actively managed funds. (The table below includes only the main category groups).

The market share of long-term passive funds was 28.8% in August 2024, up from 25.5% in August 2023. When including money market funds, which are the domain of active managers, the market share of index funds was was 25.1% from 22.3% 12 months earlier.

The Purest ESG Strategies See Outputs

Funds covered by Article 8 of the Sustainable Finance Disclosure Regulation had net inflows of €8.3 billion in August, the fourth consecutive month of positive inflows. Large-cap global equities and flexible USD bond funds were the main drivers. At the same time, Article 9 funds (“dark green” strategies) lost €587 million, marking the 11th consecutive month of net outflows.

From an organic growth perspective, Article 8 funds have shown an organic growth rate of 1.29% for the year to date. On the other hand, the products in the Article 9 group recorded a negative organic growth rate of 3.97% during the same period. Between January and August, funds that are not considered Article 8 or Article 9 under the SFDR had average organic growth rates between 0.75% and 4.87%.

Winners and losers among asset managers

Below are the ten fund houses that raised the most and the least in Europe in August 2024, with details between passive and active management (excluding money market funds).

Find out which categories, funds and companies saw the biggest inflows and outflows. Click here to download full report.

The analysis was carried out with the platform for financial professionals, Morningstar Direct. Click here to learn more about its features.

Data notes

The figures in this report were compiled as of September 17, 2024 and reflect only funds that reported net assets by that date. About 31,300 European-based open-end and exchange-traded funds that Morningstar tracks from more than 2,900 fund companies in 36 domiciles were included. Organic growth rate is flows as a percentage of initial assets.

Methodology

Morningstar calculates flows using the industry standard approach: Estimated net flow is the change in assets that is not explained by fund performance. Our method assumes that flows occur uniformly throughout the month. Adjustments for merges are made automatically. When liquidated funds are included, the final assets of the fund are counted as outflows. Reinvested dividends are not accounted for as income. We use fund-level reinvestment rates to improve accuracy in this regard. We make ad hoc adjustments for unusual corporate actions, such as reverse stock splits, and overwrite our estimates with actual flows if managers are willing to provide us with the data.