EFAMA, the European Fund and Asset Management Association, published a press release titled, "2024 was a record year for ETFs and MMFs," which tells us, "In our latest Monthly Statistical Release, we show the main developments for the European investment fund market in December 2024 and include a first overview and analysis of the full year 2024." They quote Bernard Delbecque, Senior Director for Economics and Research at EFAMA, who comments, "Equity UCITS inflows rebounded in 2024, driven by strong stock market performance. Meanwhile, other UCITS categories followed similar trends to 2023: sustained demand for bond UCITS as interest rates declined, record-breaking net sales of both ETFs and MMFs, and continued net outflows from multi-asset UCITS." (Note: Please join us for our upcoming Bond Fund Symposium, which is March 27-28 in Newport Beach. We hope to see you later this month in Southern California!)
Thomas Tilley, Senior Economist at EFAMA, comments on the December 2024 figures, "Despite global stock markets edging lower, net sales of equity UCITS rose to a new 44-month high in December 2024. This was thanks to strong net inflows into equity ETFs, in addition to non-ETF equity funds returning to positive territory after being negative for most of the year."
The release explains, "The main developments in 2024 can be summarised as follows: UCITS and AIFs experienced net inflows of EUR 665 billion in 2024, marking a substantial increase from net sales of EUR 237 billion in 2023. The net assets of European investment funds grew by 13.2%, reaching a new record high of EUR 23.5 trillion. UCITS registered net sales of EUR 618 billion in 2024, more than tripling from EUR 183 billion in 2023."
It continues, "Net sales of equity UCITS rebounded strongly in 2024, driven by record inflows into equity ETFs. After muted net sales of just EUR 5 billion in 2023, net sales surged to EUR 141 billion, supported by the strong performance of global stock markets, particularly in the US. However, similar to the previous year, investors clearly preferred ETFs when investing in equity funds. Equity ETFs attracted a record EUR 192 billion in net new money, while non-ETF equity funds experienced net outflows of EUR 51 billion."
EFAMA writes, "Investors poured into bond UCITS as interest rates began to decline. Several major central banks cut rates in 2024, with markets anticipating further easing. This fueled annual net inflows of EUR 275 billion, nearly doubling the EUR 144 billion recorded in 2023 and marking the highest level since 2019. In contrast to equity UCITS, non-ETF bond UCITS dominated inflows, attracting EUR 223 billion, while bond ETFs saw net sales of EUR 52 billion."
They state, "Money market funds (MMFs) achieved a record-breaking year, with net inflows reaching an all-time high of EUR 223 billion. The surge was largely driven by an inverted yield curve, which persisted for much of 2024 and made short-term assets more attractive. Additionally, strong inflows suggest that some investors opted for MMFs as a cash alternative, maintaining a wait-and-see approach in uncertain market conditions."
EFAMA also says, "2024 marked another record year for ETFs. Net ETF sales soared to EUR 261 billion, far surpassing the previous record of EUR 169 billion in 2023. ETFs are increasingly the preferred investment vehicle for investors seeking exposure to US and global stock markets. AIFs saw modest but positive net inflows. Net sales totalled EUR 47 billion, slightly below the EUR 54 billion recorded in 2023. Unlike UCITS, AIFs follow a different sales pattern due to their distinct investor base. Bond AIFs led net sales with EUR 39 billion, followed by multi-asset AIFs at EUR 37 billion."
They summarize, "Analysing the data for December 2024, EFAMA highlighted the following: Net sales of UCITS and AIFs totalled EUR 80 billion, down from EUR 95 billion in November 2024. UCITS recorded net inflows of EUR 78 billion, compared to EUR 82 billion in November 2024. Long-term UCITS (UCITS excluding money market funds) recorded EUR 64 billion of net sales, up from EUR 33 billion in November 2024. Of these, ETF UCITS saw net inflows of EUR 32 billion, slightly higher than the EUR 31 billion recorded in November. Equity funds registered net inflows of EUR 41 billion, up from EUR 20 billion in November 2024. Net sales of bond funds amounted to EUR 22 billion, compared to EUR 17 billion in November 2024. Multi-asset funds recorded net outflows of EUR 0.3 billion, compared to net outflows of EUR 5 billion in November 2024. UCITS money market funds attracted net inflows of EUR 14 billion, down from EUR 49 billion in November 2024."
Another press release, "ICI and ISS MI BrightScope Report 401(k) Plan Participants Continue to Benefit from Employer Contributions and Falling Fees" explains, "401(k) plans that use automatic enrollment mechanisms and/or employer contributions are critical to encourage workers to save and to invest for retirement, according to The BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans, 2022. More than one-third of large 401(k) plans have automatic enrollment, and nearly 90 percent make employer contributions."
The study says, "In 2022, the average large 401(k) plan offered 29 investment options, of which about 13 were equity funds, three were bond funds, and nine were target date funds. Nearly all plans offered at least one domestic equity fund, international equity fund, and domestic bond fund. CITs held 43 percent of large private-sector 401(k) plan assets in the sample in 2022. Mutual funds held 35 percent of assets, guaranteed investment contracts (GICs) held 6 percent, separate accounts held 3 percent, and the remaining 12 percent were invested in individual stocks (including company stock), individual bonds, brokerage, and other investments. However, mutual funds accounted for the largest share of assets in all but the very largest plans, where a larger share of assets was held in CITs."
ICI writes, "In 2022, 40 percent of large 401(k) plan assets were held in equity funds, 33 percent were held in balanced funds (with most of that being held in target date funds), and 7 percent were held in bond funds. GICs and money funds accounted for 8 percent of assets. Domestic equity funds, international equity funds, and domestic bond funds -- all of which include both index and actively managed funds -- were the most likely investment options to be offered in large 401(k) plans in 2022.... Forty-six percent of large 401(k) plans offered money funds, and 72 percent offered guaranteed investment contracts (GICs)."
They continue, "For most investment types, availability by plan size did not vary much. However, larger plans were more likely to offer other investments (which include company stock), GICs, and money funds.... Similarly, 33.4 percent of plans with less than $1 million in plan assets offered money funds in 2022, compared with 75.9 percent of plans with more than $1 billion.”
The survey states, "In 2022, large 401(k) plans included three bond funds (mostly domestic, including both index and actively managed funds) in their investment lineups, on average.... Plans also offered money funds, GICs, and other options. These investments were not offered as widely ... and were often included as the single choice in that investment type."
Finally, discussing expenses, the survey adds, "The average expense ratio for bond mutual funds in the BrightScope database was 0.29 percent, compared with 0.22 percent in the ICI database, and the expense ratio for money market mutual funds was 0.10 percent in the BrightScope database compared with 0.13 percent in the ICI database.... Money market mutual funds had the lowest expense ratio of any of the asset classes with an asset-weighted average expense ratio of 0.10 percent of assets in 2022 for money market mutual funds in large 401(k) plans."
