Euro high yield mutual funds outpace those of U.S.

Although smaller, the market for European high-yield mutual funds is growing faster than its U.S. counterpart, a new report reveals.

Cerulli Associates, Boston, unveils this finding in the third quarter 2013 edition of “The Cerulli Edge: Europe.” The report provides a market analysis of equities, bonds, and other asset classes, including high-yield vehicles and funds of hedge funds.

The report pegs the European high yield market at U.S. $360 billion in April 2013, up from $280 billion in April of 2012, a 28.6 percent increase. Over the same period, the U.S. high-yield market grew to $1.15 trillion from $1.015 trillion, a 13.3 percent rise.

From April of 2009 to April of 2013, the two high yield markets grew as follows:

 

Europe

% change

U.S.

% change

April 2009

$175

N/A

$750

N/A

April 2010

$225

28.6%

$830

10.7%

April 2011

$250

11.1%

$1,010

21.7%

April 2012

$280

12%

$1,015

0.5%

April 2013

$360

28.6%

$1,150

13.3%

Source: Cerulli Associates, J.P. Morgan Asset Management. Figures are in $ billions.

“With a face value of $362 billion (€282 billion), [the European high-yield market] is far smaller than the $1.1 trillion U.S. high yield market, but it has grown far faster,” the report states. “The European market is now three times bigger than it was four years ago.

“Superficially, that huge increase is good for European high yield fund managers and allocators,” the survey adds. “They now have more choice of issuers and issues, a wider diversification of countries of domicile and of sectors to choose from.”

European high-yield mutual funds by assets under management stood at €215 billion in April of 2013, up from €192 billion in April of 2012, a 12 percent increase. During the same period, European high yield mutual fund net new flows dipped to €16 billion from €49 billion.

However, the April 2013 figure is significantly higher than the net new flows recorded in 2011, which stood at €2 billion.

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