Figures UCITs sector 3rd quarter 2021
17 December 2021 - 7 min Reading time
The Belgian fund sector experienced a growth of +1.5% during the third quarter of 2021, entirely driven by net subscriptions. By the end of September 2021, the net assets of publicly distributed funds in Belgium amounted to 263.5 billion EUR.
- The net assets of funds primarily investing in non-fixed-income securities, such as mixed funds and equity funds, increased by +1.3% during this period. Mixed funds saw the most significant increase in their net assets during the third quarter of 2021. Within this category of mixed funds, pension savings funds saw an increase of 0.3 billion EUR during the period from July to September 2021.
- The net assets of funds mainly investing in fixed-income securities recorded an increase of +2.4% during the third quarter of 2021.
Both funds investing in non-fixed-income securities and those investing in fixed-income securities experienced price losses in their underlying assets during the third quarter. However, these price losses were fully compensated by net subscriptions.
Fourth Quarter 2021 Forecast
Preliminary indications for the fourth quarter of 2021 suggest a further growth in the net assets of the Belgian fund sector.
Belgian Fund Market
The Belgian fund market is defined as 'the net assets of funds distributed publicly in Belgium, whether under Belgian or foreign law.' BEAMA reports on all share classes of public funds that can be marketed in Belgium.
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Research by BEAMA shows that the net assets of publicly distributed funds in Belgium increased by 3.9 billion EUR, or +1.5%, during the third quarter of 2021. As a result, publicly distributed funds in Belgium represented 263.5 billion EUR by the end of September 2021.
The increase in the Belgian fund market during the period from July to September 2021 is entirely explained by net subscriptions during this period.
During the first nine months of 2021, the Belgian fund market increased by 31.7 billion EUR, or +13.7%. This increase is attributed to over 60% to net subscriptions and just under 40% to gains in prices recorded by the underlying assets. According to the statistical data of the NBB, the first half of 2021 was characterized by a significant (re)allocation of household savings to funds. The funds held by individuals were the fastest-growing financial asset category during this period. This finding may reflect an increasing awareness among investors of the opportunity cost associated with various forms of saving and investing, especially in an environment of ultra-low interest rates and rising inflation, using other financial assets that, on average, provide a higher return.
Opportunity costs, also known as alternative costs, are the costs of an economic choice expressed in terms of the best missed opportunity: it evaluates the unrealized yield of the best possible alternative compared to the decision ultimately made.
The ongoing demand for funds observed in the third quarter of 2021 indicates that investors continue to have confidence in the potential return prospects offered by funds.
Preliminary indications, available to BEAMA for the fourth quarter of 2021, suggest a continued growth in the net assets of the Belgian fund sector.
Funds Primarily Investing in Non-Fixed-Income Securities
Within the group of funds primarily investing in non-fixed-income securities (such as equity funds), with the exception of capital-protected funds, only upward trends were recorded during the third quarter of 2021. These increases are entirely due to net subscriptions.
The assets in Belgium of equity funds increased by 1.1 billion EUR, or +1.2%, during the period from July to September 2021. This increase is entirely attributed to net subscriptions. By the end of September 2021, the assets of equity funds amounted to 88.6 billion EUR. Equity funds thus exceeded their level at the end of 2019 (= pre-Covid-19) by 22.8 billion EUR.
The category of mixed funds (including pension savings funds) saw an increase of 1.8 billion EUR, or +1.5%, during the third quarter of 2021. This increase is entirely attributed to net subscriptions. This brings the marketed assets of mixed funds by the end of September 2021 to 123.2 billion EUR, or 17.6 billion EUR above their level at the end of 2019 (= pre-Covid-19).
Mixed funds have been increasingly successful in recent years, and since 2015, they have represented the largest asset class. Due to their active asset allocation, mixed funds are very suitable for conducting a risk diversification policy under MiFID II: they are excellent for aligning the product with the client's risk profile.
Within the category of mixed funds, pension savings funds increased by 0.3 billion EUR, or +1.4%, during the third quarter of 2021. By the end of September 2021, pension savings funds represented a net asset amount of 24.6 billion EUR. Thus, pension savings funds achieved a new record in marketed assets. During the third quarter of 2021, pension savings funds recorded net subscriptions of 117 million EUR.
Funds with capital protection experienced a decrease of 0.2 billion EUR during the third quarter of 2021, representing a net asset amount of 2.7 billion EUR by the end of September 2021. This movement is attributed to net repayments.
Funds Primarily Investing in Fixed-Income Securities
Within the group of funds primarily investing in fixed-income securities, the assets of bond funds publicly distributed in Belgium decreased by 0.4 billion EUR, or -0.8%, during the third quarter of 2021, bringing their total to 44.5 billion EUR by the end of September 2021. The decrease is entirely explained by the price losses recorded by the underlying assets.
The net assets of monetary or money market funds increased by 1.5 billion EUR, or +65.5%, during the period from July to September 2021.
This increase is mainly due to a technical intervention in the portfolios of mixed umbrella funds. Given the earlier negative market movements during the third quarter, asset managers of umbrella funds exchanged some of their underlying bond funds and more volatile equity funds for stable monetary funds to mitigate the effect of the temporary downturn in financial markets.
Funds under Belgian Law
Publicly distirbuted funds under Belgian law
Publicly distributed funds under Belgian law had a total managed net asset value of 198.7 billion EUR at the end of September 2021. At that moment, pension savings funds roughly represented 1/8th of the publicly distributed funds under Belgian law.
The calculation of the average annual return for pension savings funds as of September 30, 2021, yields the following results:
- 1-year: +14.7% (Note: this measurement starts relatively shortly after the Covid-19 low point)
- 3-year: +5.5%
- 10-year: +6.8%
- 25-year: +6.0%
BEAMA has developed a dashboard for pension savings funds, which is attached to this press release. Thanks to this dashboard, key figures about third pillar pension savings funds and their evolution are visually presented in a concise manner on a quarterly basis.
Non-publicly distributed institutional funds under Belgian law
Since the implementing royal decrees were published in the Belgian State Gazette on December 18, 2007, investment vehicles tailored to institutional investors can be developed under the form of "Institutional ICB with a variable number of units of participation." These institutional funds are non-public funds that must be registered with the Federal Public Service for Finance.
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).
At the end of September 2021, the 116 institutional compartments under Belgian law represented a net asset value of 24.6 billion EUR. These funds attract many institutional investors, partly because they provide depth to the institutional markets in terms of financial assets and pension formation
