July was a month peppered with contradictions – some good, some bad and some ugly – with investors’ heightened risk aversion and eager anticipation of central bank action to lower interest rates just two of the drivers of fund flows.
The plus of robust long-term net sales for the month of €23bn was somewhat tempered by the fact that 81% of net inflows were sourced from passive funds – the largest such passive influx since January 2018 when, tellingly, the passive weighting was just 23%. At the headline asset class level it was the same old picture: the bond boom continued, netting €32bn in July, while equity and mixed asset continued to haemorrhage money, recording outflows of €5bn and €4bn respectively.
Problems over recent months at a number of asset managers including Woodford, H20 and GAM, have turned both the media and regulatory spotlight onto the subject of liquidity risk in the funds industry – a critical issue unlikely to go away any time soon. And, unfortunately, it seems the same can be said of Brexit, which is doing its best to paralyse most aspects of UK-life.