JPMorgan Asset Management Now the Leader in Europe
European cross-border fund sales in the 2014 third quarter reveal BlackRock falling behind JPMorgan Asset Management. Aggressive price cutting in its ETFs allowed Vanguard to earn the third position for sales. JPMorgan has now earned the lead for sales in the International category while Blackrock has slipped from leader to eighth place in sales. Third place Vanguard is just behind Deutsche Asset and Wealth Management. In the UK Neil Woodford’s newly created Woodford Investment Management also outperformed BlackRock and funds of other British asset managers.
Volatility Brings Caution to ECB
Equity and fixed income mutual funds were negatively impacted by increased volatility as central banks on each side of the Atlantic cautioned investors. Sales in European mutual funds in many cases fell by half from the second quarter based on Lipper data. The European Central Bank responded by reducing eurozone refinancing, deposit, and marginal lending rates, and planning to buy covered bonds to preclude deflation. The result? The euro fell against the dollar to a new low, causing further erosion of two-year European government bond yields and a drop of 71.5% in international bond sales. Across the pond bond funds were down by 88%. Eurozone recession concerns and increased redemptions by international investors affected equities negatively. Fidelity Worldwide Investments’ Paras Anand noted, given the erosion of value, that it is not “unsurprisingly, given this backdrop, investor allocations to European equities remain relatively low.” With this background and with the weakness in the euro versus the dollar, it is anticipated that the European corporate sector should move forward.
European Demand for US Equities
JPMorgan Asset Management’s head of European funds, Massimo Greco, notes that the demand for US equity funds from European investors continues, maintaining the strong gains of the past two years. He notes that “the US equity market has been … a haven from turbulance in other parts of the world …” although the US equity market has undergone some correction recently, resulting in “the S&P going on to new highs in the fourth quarter.”
Tianhon Asset Management Emerging as Fund Leader in China
Despite fund sales in China proper dropping 34% in the third quarter, fund sales in Hong Kong have been positive. Online services for money market funds is the chief driver in the China’s funds sector. Tianhon Asset Management’s Yu’e Bao (a money market fund) has seen a decline in assets as interest rates on interbank deposits decreased. Alibaba with a close relationship to Ye’e Bao is seeking to develop access for the fund to markets beyond China. Lipper’s Xav Feng, head of its Asia-Pacific research, sees the market surge in Hong Kong as investor repositioning in anticipation of the implementation of a common Shanghai-Hong Kong exchange related to the financial reform restructuring now going on in China.