Europe’s fund investors continue their hunt for yield, Morningstar

The hunt for yield continues for European fund investors, Morningstar has warned in its latest European asset flow data.

Long-term open-end fund posted record inflows of €115.1bn in the first quarter. Money market funds suffered outflows in the first three months of 2013, indicating that fund investors continue to seek yield over safety in spite of the Eurozone crisis.
Investors remained focused on fixed-income funds, which enjoyed March inflows of €15.1bn.

Allocation funds raked in EUR 8.8 billion; equity funds saw €4.2bn in net new money.
USD and EUR diversified bond and UK large-cap blend equity funds posted the highest outflows in March.

Templeton Global Total Return Fund topped the list of asset-gathering long-term funds in Europe both in March and in the first quarter. On the back of strong inflows into two global bond flagship funds, Franklin Templeton collected the highest inflows in the first quarter at the provider level, unseating PIMCO.

Ali Masarwah of Morningstar’s European research team said: “We’re still awaiting a strong indicator of a ‘great rotation’ out of bond funds. Flows into equity funds receded for the third consecutive month, but bond funds posted a month-over-month increase March. Although their appetite for equity funds remains muted, investors continued to pour money into risky assets. Investor preference for debt over equity is also highlighted by substantial inflows for allocation funds in March.”

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