European funds industry turns negative in May, Lipper reports

In May for the first time in 2012, the European funds industry reported net outflows of €3.6bn, according to Lipper’s monthly snapshot of European fund flow trends published today.

“Outflows where not as severe as any of the months of the second half of 2011, when monthly outflows averaged €22.4bn,” said Ed Moisson (pictured), head of UK and cross-border research at Lipper.

Investors moved out of equity funds with redemptions of €13.1bn, while sales of bond funds hit their lowest monthly total of 2012, at €6.6bn.

Inflows to money market funds were at €8.2bn and only masked the extent of withdrawals from ‘longterm’ funds. Without these sales the industry suffered outflows of -€11.8bn, Lipper said.

“Stock market fears, and the resulting impact on equity fund sales, were sufficient to decimate activity in the previously buoyant UK and cross-border markets, suffering outflows of €1.6bn and €1.7bn respectively excluding money market funds,” Moisson said.

The Italian and French fund markets endured further severe withdrawals, with €2.4bn and €1.7bn outflows respectively.

High Yield funds were not immune, with products of different currencies suffering redemptions of €980m, despite US funds enjoying inflows of €690m.

“The latter probably reflects a wider shift into US$-denominated bonds that totalled €3.1bn in May and brings the year-to-date total to €21.7bn. This month the bulk of money moved into core US$ bond funds (€1.5bn), but US Short-term funds (€480m) and US Corporates (€370m) also prospered,” Moisson said.
Besides ETFs, several groups managed to attract inflows to their equity funds this month.

He added: “Saudi Arabian-based SEDCO has just launched three Shariah compliant funds with €480m) inflows, Morgan Stanley’s sales of €390m have been led by two well-established actively managed funds (Global and US equities), while Vanguard’s inflows spread across a variety of index tracking products, totalling €200m for equity funds”.

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