Net assets of UCITS and AIFs recorded an increase of 4.5% in Q1 2021, reaching €19.6trn, according to the European Fund and Asset Management Association's (EFAMA) latest investment fund industry factsheet.

UCITS net assets increased by 5.6%, driven by robust stock market gains and strong net sales, which amounted to €169bn in the first quarter of the year, compared to €226bn in Q4 2020.

Net assets of AIFs grew by 2.6%, attracting €32bn in net new money over the quarter, compared to €64bn in Q4 2020. Combined, UCITS and AIFs attracted €201bn of net inflows in Q1 2021.

"Positive net sales and rising stock markets pushed the net assets of UCITS and AIFs very close to the symbolic level of €20trn in the first quarter of the year," Bernard Delbecque, senior director for economics and research at EFAMA, said.

"Net sales of equity UCITS remained exceptionally strong through the quarter as investors' confidence continued to strengthen thanks to extensive vaccine rollouts, strong signs of economic recovery and the good performance of stock markets."

Demand for equity funds climbed to another record after the already high net inflows in Q4 2020 (€129bn).

In Q1 2021, net sales of equity funds edged even higher to reach €133bn. The sustained attractiveness of equity funds was supported by strong stock market performances, both in Europe and across the world, according to the factsheet.

Net sales of bond funds increased from €49bn in Q4 2020 to €54bn in Q1 2021. Net inflows into multi asset funds declined from €39bn in Q4 2020 to €34bn in Q1 2021, whereas net sales of other funds rose from €30bn in Q4 2020 to €60bn in Q1 2021.

As investor confidence increased further in Q1 2021, investors shifted their investments into long term funds, with money market funds recording net outflows (€80bn) for the first time since Q1 2020.

First published by our sister title Investment Week