Multi-Asset Shines in Bumper Year for Fund Flows

Multi-asset funds had record flows in the first half of 2014 and took the second largest chunk of new investor capital in Europe, data has shown.

Some €62.5 billion was committed to mixed asset funds in the first six months of the year, according to Thomson Reuters, which was €2 billion more than flowed into pure equity.

“European fund flows year to date have been remarkable,”— Thomson Reuters Bond funds took almost as much as these two figures combined, with €114 billion committed to fixed-income strategies, marking a bumper year for fund sales.

“European fund flows year to date have been remarkable,” Thomson Reuters said in its mid-year review. “Total European net sales of €252 billion into mutual funds are up 34% from the entire sales figure for 2013 (€188 billion) and currently represent the highest sales figure since 2006 (€372 billion).”

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

Spanish investors gave the most to multi-assets funds, with €6.2 billion in net sales, followed by German investors, who committed €6 billion to the strategy. UK investors put €5 billion to work in this sector in the first half of the year.

Allianz Global Investors’ Income and Growth fund collected the most assets in the sector, with €3.4 billion in net sales, followed by Morgan Stanley’s Diversified Alpha Plus strategy.

Multi-asset investments made up 10% of total fund capital at the end of June, while equity funds remained on top with 35% of assets and bond funds had 26%.

Commodities had dismal sales with just €53.2 million committed to the asset class. However, this was better than the outflows of €7 billion last year.

BlackRock received the largest net inflows in the first half of the year (€19.2 billion), followed by UBS (€11 billion), and Den Norske (€9.3 billion). Of the top 10 funds sold in Europe this year, seven of them were run by BlackRock’s iShares.

The top five fund managers in the sales ranking took 23% of all inflows in the first half of the year.

UK-based hedge fund managers have seen a sharp decline in compensation over the last two years, according to salary data tracker Emolument.

The median base salary for director-level professionals fell from £120,000 ($199,000) in 2012 to £101,000 in 2013. This year, it has dropped again to £90,000.

“Over the last few years since 2008, hedge fund managers have been more willing to show flexibility when it comes to management fees, which is why base salaries have been eroding thus,” said Robert Benson, the data firm’s CEO.

Compared to base salaries, bonuses took an even deeper dive between 2012 and 2013, from £135,000 to £40,000. The median incentivized payout recovered somewhat over the last year to £85,000.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

Benson noted that hedge fund directors “are at a particularly volatile level when it comes to bonuses as they are deemed expensive by their firm but not so senior that they are absolutely essential to the business, therefore seeing their bonuses slashed dramatically.”

Macro hedge funds, one of the leading strategies by assets under management, has improved its performance in the year-to-date but is still suffering outflows, according to eVestment data. A total of $2.5 billion was withdrawn during July alone.

Still, industry-wide hedge fund assets remain above $3 trillion.