Tue, 02/12/2008 - 15:58
For the first nine months of 2008, Ucits recorded total net outflows of EUR193bn, including EUR92bn in the third quarter, according to the European Fund and Asset Management Association, which attributes the outflows to a loss of confidence in stock markets, chaos in credit markets that accelerated with the bankruptcy of Lehman Brothers and strong competition from bank deposits.
With a total of EUR134bn of net outflows through September, equity funds suffered the most, followed by bond and balanced funds. Money market funds were the only category that recorded net inflows.
Net redemptions for the first nine months of 2008 amounted to just 3.5 per cent of Ucits assets at the end of last year, despite the recent intensification and broadening of the financial market turmoil. However, a combination of market declines and net outflows has shrunk European investment fund assets by EUR1.06trn, or 13.5 per cent, over the first three quarters of 200, which Efama says is now prompting industry cost-cutting and rationalisation measures.
Net outflows over the first nine months of the year have remained negligible in the UK and Luxembourg (less than 1 per cent) and small in France and Germany, at 3 and 4.5 per cent, respectively. In Spain and Italy, however, net outflows reached 16 and 19 per cent, reflecting strong competition at distribution level from bank deposits, and Ucits face similar difficulties in Greece and Portugal.
Total Ucits assets fell by 6.4 per cent in the third quarter to EUR5.18trn, with more than 77 per cent of the decline reflected a decrease in equity fund assets, within which falling stock prices accounted for 82 per cent. Ucits assets are down 15.9 per cent since the end of 2007.
Total assets of non-Ucits funds declined by 2 per cent in the third quarter to EUR1.66trn, with the resilience of special funds reserved for institutional investors helping limit the decline in fund assets. Overall, special funds attracted EUR46bn of net inflows in 2008 up to the end of September, with Luxembourg and German funds collecting 96 per cent of the new money. Total assets of non-Ucits funds are down by 4.9 per cent this year.
Efama argues that with stock prices having fallen so fast in recent months, equity funds could soon be well placed again to attract net inflows, while falling interest rates amid a global economic downturn could help to restore demand for bond funds. However, the association says, governments and central banks will have to convince investors that their actions will restore financial stability and support economic activity on a sustainable basis.
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