Morningstar: Only SLI GARS survives ‘massive’ August outflows

Only Standard Life Investment’s Global Absolute Return Strategy managed to achieve positive flows during August, according to Morningstar’s latest European fund flow figures.

Within Europe’s 10 largest open-ended funds, only SLI’s GARS, both its UK and and Luxembourg-domiciled SICAV versions, saw positive inflows over the month, of €401m (£296m) and €139m respectively.

The remaining eight largest funds saw outflows during August, with M&G’s Optimal Income fund topping the ranking as it lost more than €1.5bn in August. 

The second worst outflows in the list were from the Templeton Global Bond Fund, which lost €1.4bn, followed by the AllianceBernstein Global High Yield Portfolio, which saw outflows of €933m.

Among asset providers, M&G, Franklin Templeton and Aberdeen suffered a total of €32.5bn in outflows so far this year with Aberdeen losing assets that account for 15.7 per cent of the firm’s 2014 year-end asset base, says Morningstar. Year to date Aberdeen has lost €9.47bn, including nearly €1.8bn in August alone.

However, outflows were highly concentrated among a few large players, says Morningstar, with almost 51 per cent of companies reporting positive flows in August in their open-ended funds.

In particular, Pioneer Investments saw the highest inflows of €1.55bn in August, with Invesco and Credit Suisse also seeing inflows of more than €1bn.

Overall, European open-ended mutual funds lost €18bn, marking the largest monthly net outflows since June 2013, according to Morningstar.

Equity funds suffered the most with investors pulling more than €20bn out of funds over the period.

This was followed by fixed-income funds losing €17.64bn, especially in high-yield bonds funds and funds with large exposure to emerging markets.

However, the “massive outflows” did not hit index funds, Morningstar found.

Long-term index funds recorded inflows of €2.17bn and, including ETFs, monthly inflows for index funds hit €11.04bn.

Morningstar manager research analyst Matias Möttölä says investors “had every reason to be shaken in August”, considering the market turmoil caused by the Chinese equity market falls.

“In euro terms, the equity market drawdown was larger than any experienced in a single month since the abyss of the financial crisis in November 2008.

”Emerging markets were the worst hit, with the Morningstar Emerging Markets Index losing 10.0 per cent of its value in euros. The last time European open-end equity funds had outflows of this magnitude was in August 2011, when fears of a Greek exit from the eurozone pushed outflows to €20.8bn.”