REFINITIV EUROPEAN FUND FLOWS REPORT: DECEMBER 2018

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1 REFINITIV EUROPEAN FUND FLOWS REPORT: DECEMBER 2018 Please attribute the content to Detlef Glow, Head of EMEA Research at Lipper and the author of this report.

2 EXECUTIVE SUMMARY December 2018: No Christmas presents for the European Fund industry December 2018 was the eighth consecutive month with net outflows from long-term mutual funds after 16 consecutive months with net inflows. The overall fund flows for mutual funds in Europe amounted to net outflows of 54.0 bn for December. Money market funds ( bn) were the best-selling individual asset type overall for December. Equity UK (+ 2.4 bn) was the best-selling sector among long-term funds for December. Ireland (+ 3.4 bn) was the fund domicile with the highest net inflows, followed by the United Kingdom (+ 3.2 bn) and the Netherlands (+ 0.8 bn). BlackRock, with net sales of 12.2 bn, was the best-selling fund promoter for December overall, ahead of Morgan Stanley (+ 5.4 bn) and Goldman Sachs (+ 4.2 bn). The ten best-selling long-term funds gathered, at the share-class level, total net inflows of 9.3 bn for December. M&G (Lux) European Strategic Value A Acc EUR (+ 1.7 bn) was the best-selling individual long-term fund for December.

3 EUROPEAN FUND FLOWS, DECEMBER 2018 European Fund-Flow Trends, December 2018 After unexpectedly high outflows in October and November, European investors pulled further away from longterm mutual funds in December as the market environment and general sentiment remained negative. As a consequence, December was the eighth month in a row posting net outflows from long-term mutual funds after 16 consecutive months showing net inflows. Real estate funds (+ 0.5 bn) was the only asset type in the segment of long-term mutual funds with net inflows for December, while all the other asset types witnessed net outflows: bond funds ( bn), equity funds ( bn), alternative UCITS funds ( bn), mixedasset funds (- 8.7 bn), other funds (- 0.5 bn), and commodity funds (- 0.1 bn). These fund flows added up to overall net outflows of 65.6 bn from long-term investment funds for December. ETFs contributed inflows of 2.2 bn to these flows. Money Market Products After a month with high outflows, European investors bought back some of their positions in money market products. As a result, money market funds witnessed net inflows of 11.6 bn for December. ETFs investing in money market instruments contributed net inflows of 0.4 bn to these flows. This flow pattern led the overall fund flows to mutual funds in Europe to overall net outflows of 54.0 bn for December, and to estimated net outflows of bn for the year Money Market Products by Sector Money Market GBP (+ 9.6 bn), Money Market USD (+ 1.7 bn), followed by Money Market Global (+ 1.0 bn), Money Market CHF (+ 0.6 bn), and Money Market AUD (+ 0.1 bn) were the five best-selling sectors in the money market segment for December. At the other end of the spectrum, Money Market EUR Leveraged (- 1.0 bn) suffered the highest net outflows overall, bettered by Money Market EUR (- 0.8 bn) and Money Market CAD ( bn). Comparing this flow pattern with the flow pattern for November showed that European investors further reduced their positions in the euro while they bought back into the British pound sterling. These shifts might have been caused by asset allocation decisions, as well as other reasons such as cash dividends or cash payments since money market funds are also used by corporations as replacements for cash accounts. Graph 1: Estimated Net Sales by Asset Type, December 2018 (Euro Billions)

4 Fund Flows by Sectors Within the segment of long-term mutual funds, Equity UK (+ 2.4 bn) was the best-selling sector, followed by Bond USD Government Short Term (+ 0.9 bn). Real Estate European (+ 0.7 bn) was the third best-selling sector, followed by Bond EMU Government LT (+ 0.7 bn) and Bond EMU Government (+ 0.6 bn). Graph 2: Ten Top Sectors, December 2018 (Euro Billions) At the other end of the spectrum, Equity US (- 3.9 bn) suffered the highest net outflows from long-term mutual funds, bettered by Equity Europe (- 3.2 bn), Bond Global (- 3.0 bn), Mixed Asset EUR Flexible - Global (- 2.9 bn), and Equity Eurozone (- 2.9 bn). Graph 3: Ten Bottom Sectors, December 2018 (Euro Billions)

5 Fund Flows by Markets (Fund Domiciles) Single fund domicile flows (including those to money market products) showed, in general, a negative picture for December, with only 13 of the 34 markets covered in this report showing net inflows and 21 showing net outflows. Ireland (+ 3.4 bn) was the fund domicile with the highest net inflows, followed by the United Kingdom (+ 3.2 bn), the Netherlands (+ 0.8 bn), Norway (+ 0.7 bn), and Guernsey (+ 0.1 bn). On the other side of the table was Luxembourg ( bn), the fund domicile with the highest outflows, which was bettered by France ( bn) and Sweden (- 2.3 bn). It is noteworthy that the majority of the flows in Ireland ( bn) and France ( bn) were caused by flows into, and out of, money market products. Graph 4: Estimated Net Sales by Fund Domiciles, December 2018 (Euro Billions) Within the bond sector, funds domiciled in Norway (+ 0.4 bn) led the table, while no other domicile witnessed inflows of 1.0 mn or more for December. Bond funds domiciled in Luxembourg ( bn), France (- 3.7 bn), and Ireland (- 1.5 bn) stood at the other end of the table. For equity funds, products domiciled in the United Kingdom (+ 5.1 bn) led the table for December, followed by funds domiciled in the Netherlands (+ 0.4 bn), Norway (+ 0.3 bn), Denmark (+ 0.2 bn), and Guernsey (+ 0.2 bn). Meanwhile, Luxembourg ( bn), Ireland (- 4.7 bn), and France (- 3.6 bn) were the domiciles with the highest net outflows from equity funds. With regard to mixed-asset products, the United Kingdom (+ 0.7 bn) was the domicile with the highest net inflows, followed by funds domiciled in Austria ( bn) and Switzerland ( bn). In contrast, Luxembourg (- 4.6 bn), France (- 1.3 bn), and Ireland (- 1.1 bn) were the domiciles with the highest net outflows from mixed-asset funds. The Netherlands (+ 0.6 bn) was the domicile with the highest net inflows into alternative UCITS funds for December, followed by Sweden (+ 0.1 bn), and the Isle of Man ( bn). Luxembourg (- 6.2 bn), bettered by Ireland (- 3.8 bn) and the United Kingdom (- 1.5 bn), stood at the other end of the table.

6 Fund Flows by Promoters BlackRock, with net sales of 12.2 bn, was the best-selling fund promoter for December overall, ahead of Morgan Stanley (+ 5.4 bn) and Goldman Sachs (+ 4.2 bn). It is noteworthy that the flows for BlackRock, Morgan Stanley, and Goldman Sachs were driven by money market funds. Table 1: Ten Best Selling Promoters, December 2018 (Euro Billions) Considering the single-asset classes, BlackRock (+ 2.4 bn) was the best-selling promoter of bond funds, followed by DWS Group (+ 0.3 bn), State Street (+ 0.3 bn), Rothschild (+ 0.2 bn), and Royal London (+ 0.2 bn). Within the equity space, BlackRock (+ 5.1 bn) stood at the head of the table, followed by Actiam (+ 0.5 bn), Royal London (+ 0.4 bn), Vontobel (+ 0.4 bn), and KLP (+ 0.3 bn). Baillie Gifford (+ 0.2 bn) was the leading promoter of mixed-asset funds in Europe, followed by Royal London (+ 0.2 bn), Eaton Vance (+ 0.1 bn), Union Investment (+ 0.1 bn), and FvS Flossbach von Storch (+ 0.1 bn). Transtrend (+ 0.6 bn) was the leading promoter of alternative UCITS funds for the month, followed by H2O Asset Management (+ 0.5 bn), Quilter (+ 0.3 bn), BlackRock (+ 0.3 bn), and PIMCO (+ 0.2 bn). Best-Selling Funds The ten best-selling long-term funds gathered at the share-class level total net inflows of 9.3 bn for December. Equity funds dominated the ranking of the asset types with regard to the ten best-selling funds (+ 7.9 bn), followed by mixed-asset funds (+ 0.7 bn) and bond funds (+ 0.7 bn). Please note that the table of the ten best-selling funds has been adapted because we witnessed some shifts within the ALM Actions Euro, ALM Credit Euro ISR, Artemis Global Income, Artemis High Income, Artemis Income, Artemis Monthly Distribution, Artemis Strategic Bond, M&G Global Dividend and M&G Global Floating Rate High Yield funds over December, when investors sold some share classes and bought back into other share classes of the same fund. A table with the affected funds and estimated net flows can be found in the Appendix. Table 2: Ten Best Selling Long-Term Funds, December 2018 (Euro Millions)

7 Appendix Below is a table with the flows for the ALM Actions Euro, ALM Credit Euro ISR, Artemis Global Income. Artemis High Income, Artemis Income, Artemis Monthly Distribution, Artemis Strategic Bond, M&G Global Dividend and M&G Global Floating Rate High Yield funds. Because of the high net inflows, some of the share classes would have been included in the list of the ten best-selling funds for May. Table 3: Money Flows into ALM Actions Euro, December 2018 (Euro Millions) Table 4: Money Flows into ALM Credit Euro ISR, December 2018 (Euro Millions) Table 5: Money Flows into Artemis Global Income, December 2018 (Euro Millions) Table 6: Money Flows into Artemis High Income, December 2018 (Euro Millions) Table 7: Money Flows into Artemis Income, December 2018 (Euro Millions) Table 8: Money Flows into Artemis Monthly Distribution, December 2018 (Euro Millions)

8 Table 9: Money Flows into Artemis Strategic Bond, December 2018 (Euro Millions) Table 10: Money Flows into M&G Global Dividend, December 2018 (Euro Millions) Table 11: Money Flows into M&G Global Floating Rate High Yield, December 2018 (Euro Millions)

9 For more information, please contact our Lipper Research Team: Detlef Glow Head of Lipper EMEA Research Phone: +49(69) Robert Jenkins Global Head of Research, Lipper Phone: +1 (617) Xav Feng Head of Lipper Asia Pacific Research Phone: Otto Christian Kober Global Head of Methodology, Lipper Phone: +41 (0) Jake Moeller Head of Lipper United Kingdom & Ireland Research Phone: +44(20) Tom Roseen Head of Research Services Phone: +1 (303) Media enquiries: Eddie Dunthorne Lipper U.S. Client Services customers.reuters.com/crmcontactus/support.asp Lipper Europe Client Services (UK) (Europe) customers.reuters.com/crmcontactus/support.asp Lipper Asia Client Services customers.reuters.com/crmcontactus/support.asp Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks and trademarks of Refinitiv and its affiliated companies.