Despite the Covid pandemic, a new report from Refinitiv Lipper shows that the European fund industry received a net inflow of 347.6 billion dollars from January to September, 2020.
According to Refinitiv’s European Fund Industry Review, money market fund which typically invest in low-risk cash, such as short-term bonds receive an inflow of approximately 247.3 billion dollars. Money market funds are the best-selling funds this year. These types of funds generate some income but are primarily used to hold cash during turbulent times, CNBC reported.
Also, long term investors invested more in global equity funds with the industry recording an inflow of 73.6 billion dollars.
However, the data and research provider found that total assets under management in the region’s fund industry rose from € 12.3 trillion in December 2019 to € 12 trillion in September 2020.
A year later, the market was highly volatile. In March, as the coronavirus’ full impact began to manifest itself worldwide, stocks have seen a broad uptrend in recent months.
Detlef Glow, Head of Research at Lipper EMEA at Refinitiv, said in the report: “The coronavirus pandemic has hit the European fund industry, the market is declining and the net outflow is estimated at 147.5 billion dollars in the first quarter of 2020.”
This trend was reversed in the second quarter, with global central banks and governments putting quantitative easing and economic relief programs to mitigate the economic downturn caused by the spread of the coronavirus and the global economic blockade.”
Glow went on to say that the relative normalization of the market since the March crash has led investors to switch to mutual funds and ETFs, with net entry positive spikes in the second and third quarters.
ETF (Exchange-Traded Fund) is a collection of securities that track the underlying index, while mutual funds are actively managed and strategically buy and sell assets to beat the market and generate returns for investors.
According to the report, ETFs have received inflow of 56.9 billion dollars so far in 2020. Glow pointed out that ETFs are growing in popularity with all types of investors.