Weekly Fund Distribution Notes – 15 April 2025
27th May 2025
Current geopolitical events and economic consequences dominate each and every client conversation these days. Unsurprisingly, the change of tides in European fund flows is accelerating. This is also reflected in current and recent selector searches. Also, are fund risks being dropped ahead of the ESMA naming rules deadline? Last but not least, friendship across borders and different political viewpoints is possible and the world needs more of it!
“Uncertainty and anxiety about the future of the markets and the economy are dominating each and every client conversation. The sweeping US tariffs announcements went beyond anything I could have imagined in my 49 years in finance” stated BlackRock’s CEO Larry Fink on Friday. Well, also in Europe, this is dominating every conversation these days. But then again, events like the current ones enable insights into asset manager and buy-side thinking to an extent hard to find in normal times. Just last week, from my desk in sunny Valencia, I watched and read well over 30 tier one European fund selector and asset allocator viewpoints, often in great detail with interesting nuances.
Current events are obviously also reflected in European fund flows. Last week, we already featured the best and worst-selling ETF categories in March in our chart of the week. According to the preliminary Morningstar data featured by Ignites Europe last Thursday, European Investors pulled EUR 3.3 billion out of US equity funds in only the first three days after the US President launched his global tariffs programme. Meanwhile, during the same three days, European equity funds garnered inflows worth EUR 495 million.
Coming back to March, again according to preliminary data, US equity funds experienced outflows of EUR 1.6 billion – the very first outflows since June 2023, when US equity funds lost some mere EUR 56 million. In contrast, European equity funds posted their largest monthly inflows in March, totalling EUR 9 billion, the highest since March 2015. However and very importantly, Ignites Europe quoted us as saying “Even when investors underweight the US, they typically still have a meaningful US exposure.”
Also when looking at recent / current European fund buyer searches, the US has widely dropped off the table, with numerous searches for European equity. Looking forward, based on various conversations, value (not deep value) and respective sectorial shifts may come back, also in terms of US equities. Nonetheless, these are unprecedented times. Some chunks of money having gone or going to the sidelines again, into the money market, should not come as a surprise.
Apart from plenty of selector features on the above (see link section below), the ING pension fund has picked Achmea IM (also from the Netherlands) as a strategic adviser for its impact investing. Pictet’s WM CIO César Pérez Ruiz spoke about “unbelievable yield and credit quality available in private credit” to Citywire Selector. Victor Guilloteau, fund selector at the French institutional advisory firm Forward Finance spoke to the same publication about his current search for a biodiversity fund. Citywire also published a feature on Euromobiliare Advisory’s fund analyst in Italy Simone Renzelli.
What else? “Funds risk being dropped ahead of Esma naming rules deadline,” headlined Ignites Europe last week. The article cited Chris Greenwald, head of sustainable investing at LGT Private Bank as saying that the bank would drop products that had removed ESG-related terms from their name. Funds would need to have the label ‘sustainable’ or ‘socially responsible investing’ for the bank to continue investing in them.”
However, he also stated that “we have a sustainability mandate that’s only investing in sustainable funds and we have decided to be consistent with the guidelines.” Well, that makes the difference. On a broader basis, we do not observe that dropping the term ESG from a fund name causes or will cause divestments, as long as the original process remains in place, credible and coherent.
Ignites also quoted Jack Turner, head of ESG portfolio management at 7IM, a UK-based wealth manager, as saying that his sustainable mandate does not align with the naming rules, which means he would consider dropping funds that had changed their investment process to comply. “Each occurrence will be reviewed independently. If the investment process remains the same, we will not change our allocation.”
Last but not least, some of you may know that I am an engaged long-term Rotary member. Beyond giving back with multiple social service projects, a central mission of Rotary is friendship beyond any borders, religions or politics. And it is something I love. Over the years, I have become close friends with people of all kinds of professions across the globe. I also have friends with almost socialist viewpoints, and others with very conservative views – but all of them are great people! Of course, we rub it in about each other’s viewpoints, but we do not allow it to affect our friendship.
In a way, it is very similar to rock music. It unites all backgrounds, young and old, all income levels etc. Everybody just wants to have a great time. Needless to say I have a massive rock concert line-up ahead this summer – including AC/DC again 🤘
