Weekly Fund Distribution Notes – 29 April 2025
27th May 2025
What a decade this month has been – including a total and unprecedented national power outage here in Spain yesterday. ESG funds experienced their very first quarter of net outflows. However, does this really reflect an agenda-driven change of tides? Also, some interesting mandate and distribution partnership news.
April is almost gone and what a year, if not what a decade, this month has been. Full of geopolitical and, in consequence, market thrills and twists and lots of money in motion. I normally do not pay too much attention to one month fund flow data, as it is regularly contorted by a few moves from some very large fund buying accounts, but April data will most likely be very different. As mentioned last week, I am intrigued to bring out a client-only assessment of the first four months this May. No promises, but stay tuned!
Talking flows, for the first time since 2018, ESG funds in Europe experienced quaterly net outflows. On Friday, the Financial Times quoted Hortense Bioy, head of sustainable investing research at Morningstar Sustainalytics, as saying that “the quarter signals a shift. We’re seeing an intensifying ESG backlash in the US, which is now also noticeably affecting sentiment in Europe. The ESG backlash coming out of the US is affecting managers and making them more cautious globally. It’s influencing the way they are talking about products and selling them outside of the US.”
True, the tone, particularly on one side of the Atlantic, has changed, but this is not new. In the US, we are now in the third year of significant ESG headwinds. However, also in the US there are still plenty of investors holding on to ESG. Take the New York pension funds for instance. Last week, the comptroller Brad Lander made it clear that they are ready to drop asset managers that do not comply with its climate plans. This is not just one lonely pension fund we are talking about. The New York City comptroller acts as custodian and trustee for five major retirement funds collectively managing about EUR 249 billion, the fourth largest public pension plan in the US.
Also in Europe, in particular when looking at the large investment consultants, asset owners and some large wholesale accounts, we do not notice a major shift away from ESG (see also our newsletter from 1 April 2025). However, there is certainly a shift in definitions on the way. Just think of the inclusion of defence or defence sub-segments in ESG.
What’s the news on the mandate side? Schroders has been awarded a EUR 120 million private equity mandate by Fopen, the pension fund for employees of Italian energy giant Enel. Fopen also handed a EUR 105 million private debt mandate to US private markets investment group StepStone. In terms of partnerships, Generali Investments and Partners Group have announced a tie-up to launch a private credit secondaries fund that will be available across EMEA. Invesco announced that it had agreed to a product and distribution partnership with Barings, which would involve both companies’ private credit capabilities. MassMutual, the US insurance company that owns Barings, would provide USD 573 million of seed for the partnership, which would target Invesco’s global wealth clients.
In Spain, Unicaja announced a partnership with BlackRock, Allianz GI and Candriam to bolster its offering of multi-asset funds. Already in February, the news emerged that X was seeking a partnership with a player offering both asset management and technology capabilities, which could provide products to be sold through the bank’s network and private banking business. Up in the very north, BlackRock has launched a trio of equity index funds for clients of Norwegian independent wealth manager Formue, with the funds being labelled Formue.
Coming back to mandates, sub-advisor fall-outs can be ugly, although this does not apply to most cases, which are mostly driven by strategy shifts or economic considerations. Anyway, just remember the Acatis / Gane case in Germany, which we covered extensively in Q1 2024. Citywire Selector has now shed some light on the GAM notice ending the 20-year tie-up with Fermat (see our newsletter from 8 April 2025). Another remarkable story.
Last but not least, the unprecedented national power outage here in Spain yesterday, with everything down, including most mobiles, gave me an unscheduled 5 hour break. Was it a cyberattack? Who knows? Maybe a bit of muscle flexing “From Russia With Love”? Anyway, did you know that most cyberattacks on Spanish businesses and also hospitals in 2024 and 2023 were actually traced back to North Korea’s Lazarus Group? And, by the way, cybercrime now ranks as the world’s third largest economy.
