Figures for the UCITs sector in the 1st quarter of 2022

Funds investing in non-fixed-income securities experienced losses in their underlying assets during the first quarter due to declining prices, further exacerbated by net redemptions in these funds.

Funds investing in fixed-income securities also recorded losses in their underlying assets during the first quarter. However, these losses were fully offset by net subscriptions.

Prognose tweede kwartaal 2022

The preliminary indications for the second quarter of 2022 suggest a further decline in the net assets of the Belgian fund sector. This is due to high inflation and recession concerns causing declines in the prices of underlying assets in most fund categories. The ongoing Ukraine-Russia conflict and supply chain issues in the industry are driving up energy and commodity prices, further fueling inflation. In response, central banks have raised interest rates, which is impacting economic growth. Additionally, the Covid-19 pandemic does not appear to be under control yet.

Research by BEAMA shows that the net assets of publicly marketed funds in Belgium decreased by 12.3 billion EUR, or -4.5%, during the first quarter of 2022. As a result, the publicly marketed funds in Belgium represented 263.1 billion EUR by the end of March 2022.

The decline in the Belgian fund market during the period from January to March 2022 is entirely attributed to losses in asset values during this period.

The year 2022 started off challenging due to the impact of rising inflation on the global economy, the ongoing war in Ukraine, Covid-19 issues, and the worldwide supply chain crisis. The first half of 2022 was characterized by negative market returns.

For reference, looking back in history, markets have ended the first half of the year with a decline of more than 20% only three times.

Despite the significant losses in underlying asset values, net subscriptions were still recorded in the Belgian fund market during the first quarter of 2022. This fact is also supported by statistical data from the NBB, which indicates that funds held by individuals were the fastest-growing financial asset category during the period from January to March 2022.

The continuing demand for funds, for now, suggests that investors still maintain confidence in funds and are aware of the opportunity costs associated with various forms of saving and investing.

Preliminary indications available to BEAMA for the second quarter of 2022 suggest a further decline in the net assets of the Belgian fund sector.

Funds Predominantly Investing in Non-Fixed-Income Securities

Within the group of funds predominantly investing in non-fixed-income securities (such as equity funds), only declining trends were observed during the first quarter of 2022. These declines are attributed to a large extent (4/5th) to losses in asset values and to a lesser extent (1/5th) to net redemptions.

The assets in Belgium of equity funds decreased by 9.8 billion EUR, or -10.4%, in the period from January to March 2022. This decline is attributable to losses in asset values (1/2nd) and net redemptions (1/2nd). By the end of March 2022, the assets of equity funds amounted to 83.8 billion EUR.

The category of mixed funds (including pension savings funds) recorded a decline of 4.4 billion EUR, or -3.4%, during the first quarter of 2022. This decline is entirely attributed to losses in asset values since there were net subscriptions of over 2 billion EUR in mixed funds. This brings the marketed assets of mixed funds to 123.8 billion EUR as of the end of March 2022.

Mixed funds have seen increasing success in recent years, and since 2015, they have become the largest asset class. Due to their active asset allocation, mixed funds are well-suited for risk diversification strategies under MiFID II, making them an excellent match for aligning the product with clients' risk profiles.

Within the category of mixed funds, pension savings funds saw a decline of 1.9 billion EUR, or -7.4%, during the first quarter of 2022. Pension savings funds represented net assets of 23.7 billion EUR by the end of March 2022. During the first quarter of 2022, pension savings funds recorded net subscriptions of 72 million EUR.

Funds with Capital Protection saw a slight decline during the first quarter of 2022 and represented assets of 2.6 billion EUR by the end of March 2022.

Funds Predominantly Investing in Fixed-Income Securities

Within the group of funds predominantly investing in fixed-income securities, the assets of bond funds marketed in Belgium decreased by 2.6 billion EUR, or -5.8%, during the first quarter of 2022, resulting in total assets of 42.2 billion EUR by the end of March 2022. This decline can be entirely attributed to losses in asset values.

The net assets of monetary or money market funds increased by 4.5 billion EUR, or +82.4%, during the period from January to March 2022.

This increase is mainly due to technical interventions in the portfolios of mixed umbrella funds. Given the ongoing indications of volatile markets during the first quarter, fund managers of umbrella funds replaced some of their underlying bond funds and, mainly, their more volatile equity funds with stable monetary funds to mitigate the impact of the decline in financial markets. Furthermore, net subscriptions to monetary funds can also be an indication of increasing risk aversion.

The table below provides an overview of the distribution of sustainable funds in Belgium as of the end of March 2022:

SFDR = Sustainable Finance Disclosure Regulation.

According to asset managers, nearly two-thirds of the distributed assets in Belgium are classified as Article 8 or Article 9 SFDR funds. Investors interested in sustainability can choose from 684 different funds.

Publicly Distributed Funds Under Belgian Law

As of the end of March 2022, publicly distributed funds under Belgian law had a total managed net asset value of 203.8 billion EUR. At that time, pension savings funds represented roughly 1/9th of the publicly distributed funds under Belgian law.

The calculation of the average annual return of pension savings funds as of March 31, 2022, yields the following results:

BEAMA has developed a dashboard for pension savings funds, which is attached to this press release. This dashboard provides a concise visual representation of key figures related to third-pillar pension savings funds and their evolution on a quarterly basis.

Non-Public Institutional Funds Under Belgian Law

Since the implementing royal decrees were published in the Belgian Official Gazette on December 18, 2007, investment vehicles tailored to institutional investors can be developed in the form of "Institutional ICB with a variable number of units." These institutional funds are non-public funds that must be registered with the Federal Public Service Finance (FOD Financiën).

These institutional funds should not be confused with publicly distributed funds with non-retail share classes, which are registered with the Financial Services and Markets Authority (FSMA).

As of the end of March 2022, there were 106 institutional compartments under Belgian law, with a total net asset value of 24.2 billion EUR. These funds attract many institutional investors, in part because they provide depth to institutional markets in terms of financial assets and pension formation.