Banque de France Bulletin no. 237: Article 1 French collective investment schemes proved highly resilient during the crisis in 2020

By Le Goff Jean-Luc, Ponsart Maxime

Thematic: Economy and international financing

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In 2020, despite the crisis, assets under management in French and European collective investment funds (CIS) increased. In particular, it was a historic year for money market funds, thanks to exceptional inflows: up 25% for France and 14% for the euro area. Over the past ten years, developments have been different for the two categories of CIS (money market and non-money market), be it in terms of investors, portfolio composition or market structure.

1 In the context of the crisis, French and European CIS have played their role as a flexible and secure instrument to allow investors to adjust their savings

The net assets of French money market and non money market funds grew by 25% and 1.6% respectively in 2020

The net assets of French CIS amounted to EUR 1,729 billion at the end of 2020, consisting of EUR 1,336 billion for non money market funds and EUR 393 billion for money market funds. The total balance sheet of CIS (EUR 1,915 billion) corresponds to 11% of the total assets managed by the French financial sector as a whole, including funds deposited in banks, CIS and insurers, and estimated at almost EUR 18,200 billion.

In 2020, despite a turbulent first quarter, the net subscriptions and changes in value of French CIS were positive overall. After three consecutive years of net investor outflows, money market funds recorded inflows of EUR 80 billion in 2020 (see Chart 1), i.e. an increase of 25% year on year, which constitutes a record since 2006. Money market fund outstandings thus returned to their end 2010 level (see Chart 1). This exceptional annual inflow contrasted with the strong demand for net redemptions (EUR 53 billion) that took place in March 2020 (see Box 1 below). This outflow was mainly driven by non financial corporations in order to meet their cash flow needs (see below).

Non money market fund flows were also positive in 2020 (up EUR 5 billion), after two years of significant outflows. Their valuation reached EUR 16 billion, i.e. up 1.2% year on year, which is below the average annual valuation over the past ten years (3.9%). However, this valuation level is still respectable given the shock that occurred in March on the markets, with a loss of value over one month of EUR 103 billion, i.e. a drop of 8%. This loss was more than offset over the rest of the year, particularly in November 2020, with a historic valuation of EUR 69 billion (5.6% monthly).

By category of non money market funds, in 2020 employee savings funds and real estate funds were the most buoyant, with inflows increasing by EUR 7 billion and EUR 6 billion respectively (see Chart 2 below). Employee savings funds thus benefited from the excess savings generated by the fall in consumption and from government measures favouring these schemes. …