It’s getting difficult to come up with new ways of describing the flood of money into Europe’s fund industry, especially when the tide keeps getting higher, as in January. But the new-business pipeline is likely to have sprung a leak in February, following a bout of sharp market volatility. In any case, the composition of fund sales in 2018 looks set to be differ from the preceding year’s. As central banks tighten up their policies, gradually removing their inadvertent support for high asset valuations, choppy markets could well boost demand for actively managed strategies. Investors appeared to be gearing up for such an eventuality in January, as equity funds took the lion’s share of net sales, with active products welcoming most. Every month, we ask third-party fund selectors about where new flows could head. Over the six months to the end of February, they showed significant interest in equities, as well as alternatives, so these will be important areas to watch this year (see Distribution).
Meanwhile, the Brexit headache grows – the Commission currently sees no scenario in which it will be possible to continue passporting UK-based Ucits (see Regulatory Overview).