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Portfolio > Mutual Funds > Equity Funds

Euro equity income funds enjoy gains

By Warren S. Hersch

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European equity income funds under management increased 20 percent in value during the past year, according to a new report.

Cerulli Associates discloses this finding in the November 2013 edition of “The Cerulli Edge: European Monthly Product Trends.” The report explores trends respecting mutual funds, money market funds and new products, including product developments by country.

The report shows that European equity income funds under management reached €180 billion ($244.8 billion) in August 2013 (year-to-date), up from €150 billion ($204 billion) in 2012. Net new flows into equity income funds over the same period rose to €15 billion ($20.4 billion) from €12 billion ($16.3 billion).

The number of European equity income funds between 2012 and August of 2013 also increased to 449 funds from 434.

“Fund groups are hoping that dividend-dependent equity income strategies can sustain them until Christmas and beyond,” the report states. “Their message is simple. With bond yields at historic lows and interest rates set to rise, the bond bonanza is ending.

“For income hunters, stocks that pay regular, sustainable dividends are a ‘bond proxy’ with substantial growth potential too,” the report adds. “Sales are rising steadily as investors across Europe test the waters.”

The report observes also that European actively managed mutual funds under management hit €4.5 trillion ($6.2 trillion) in September 2013, up from €$4.4 trillion ($6 trillion) in August. European passively managed funds under management during the same period rose to €621 billion ($844.6 billion) from €602 billion ($818.7 billion).

Net new flows of both actively managed and passively managed mutual funds also increased between August and September. Flows of passive funds edged up modestly to €0.7 billion ($1 billion) from €0.5 billion ($0.7 billion), while active funds rose markedly to €12 billion ($16.3 billion) from a -€4 billion (-$5.4 billion).

Among the 18 European countries surveyed, Hungary experienced the greatest net new flows in September, enjoying a 25 percent increase from the month prior. This compares with 12.5 percent for the Czech Republic and 8.7 percent for Spain, countries that occupy, respectively, second and third place in the rankings.

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