Lively funds usually are not muscled by ETFs, says the refinitive professional


ETFs are traded on exchanges so they can be bought and sold like stocks through a broker.

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Although exchange-traded funds are becoming increasingly popular, they are not yet penetrating the area of ​​actively managed funds, according to Detlef Glow, head of Lipper EMEA Research at Refinitive.

Money market funds, which typically invest in low-risk, liquid assets such as short-term bonds, were up year-to-date with inflows of € 211.3 billion ($ 248.4 billion) according to Refinitiv's European Fund Industry Review. Funds focused on global equities were the most popular with long-term investors. The sector recorded inflows of 62.8 billion euros.

ETFs have seen inflows of € 48.5 billion so far in 2020, and Glow stressed that their popularity has increased with all types of investors. ETFs are collections of securities that track an underlying index while mutual funds are actively managed and strategically buy or sell assets in order to beat the market and generate profits for investors.

However, Glow told CNBC's Squawk Box Europe on Monday that despite popular belief, ETFs did not materially affect demand for active mutual funds.

"If you look at general assets under management, we invested $ 11.1 trillion in mutual funds, which is 92.7% of the market, and we only invested $ 0.87 trillion in ETFs, which is 7.3% of the market Market equals market, "said Glow.

In terms of inflows, things looked a little better for ETFs: 45.8 billion euros of total inflows, or 15%, went to ETFs and the remaining 85% to mutual funds.

"That 15% is about the average we've seen over the past few years, so in my view, there's no need to worry too much about ETFs when it comes to net sales," said Glow.

Total assets under management decreased

The report found that the fund industry had been badly hit at the start of the pandemic, with a net outflow of € 125.9 billion in the first quarter of 2020.

The strong fiscal and monetary response from governments and central banks around the world, and the subsequent normalization of markets, drove investors back into ETFs and mutual funds in the second and third quarters, bringing total net inflows to € 297.1 billion by the end of September.

"We see European investors putting their money on the sidelines by shopping in money market Europe, money market US dollars and money market pounds sterling," Glow told CNBC on Monday.

"But we also see that they are interested in diversified products, i.e. Equity Global, as well as specific topics such as information technology and healthcare."

However, Refinitiv found that total assets under management across the region's fund industry fell from € 12.3 trillion in December 2019 to € 12 trillion in September 2020, largely due to the performance of the underlying markets at € 531 billion Euro decline.

In the report, BlackRock was identified as the top-selling fund promoter with net sales of € 68.3 billion, followed by JPMorgan with € 56.9 billion and Goldman Sachs with € 23.3 billion.


Katherine Clark