Inflows in to bond funds in 2017 resulted in the European asset management industry posting a record high inflow figure of €664bn by the end of November, dwarfing the previous high of €414bn recorded in 2014, according to Morningstar.
Data from Morningstar Direct to month-end November 2017 showed fixed income funds dominated investor flows across the year with inflows of €270bn while equity funds only posted €98bn. However, this was still the best year for open-end equity funds since 2013. Allocation funds raised €120bn in total for the year.
BlackRock is set to post the highest inflows of all European asset managers as net new assets surpassed the €60bn threshold in November on the back of demand for its actively managed open-ended fixed income, alternative and equity funds.
This was followed by PIMCO, another big fixed income manager, which saw net new assets of €50.8bn.
At the fund level, the PIMCO GIS strategy was a key beneficiary of the bond popularity, generating almost €4bn of new assets in November, the most of any fund, taking its total AUM to over €58bn.
Director of EMEA editorial research at Morningstar Ali Masarwah said: "The continuation of the bull market throughout 2017 has driven positive investor sentiment across Europe, with asset managers enjoying record inflows as a result.
"It is safe to assume that 2017 will be remembered as the year of the bond fund, in spite of low yields and warnings of extremely high valuations.
"Structural demand for fixed income products has driven inflows across Europe this year, with the largest bond houses and flagship funds benefiting the most from the flow of assets."
The M&G Optimal Income and JPMorgan Global Income funds also saw strong inflows in November of €510m and €406m respectively.
Despite "broad appetite for riskier assets within fixed income", high-yield bond categories also saw large outflows in November, driven by "widening spreads [which] gave many investors the jitters", Morningstar said.
USD high-yield bond funds saw the heaviest net outflows, as close to €2bn was pulled, the highest level seen since May 2016. Funds of Neuberger Berman, AXA IM and Muzinich took the heaviest punishment.
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