Europe’s hunger for equities returns after March redemptions

A sharp renewal of interest in equity funds by European investors in April, leading to €12.9bn net monthly inflows, seems to have misfired in the short term after global shares fell 7% from May.

Data monitors Lipper noted European investors’ subscriptions for equity funds followed net withdrawals of €8.5bn in March – “the latest twist in the changing attitudes to the stock market”.

It said similar changes in sentiment also affected emerging market equities funds, which received large inflows in the second half of 2010, then suffered redemptions in the first quarter, then received inflows of €4.2bn in April.

Lipper said flows into and out of bond funds were “much less hectic”. Emerging market bond funds took in €2.6bn in April.

Net sales of bond funds gradually improved each month since December. In April, they took in €7bn.

But this masks the fact investors have withdrawn €28.7bn from euro-denominated products this year, while putting €18.7bn into high yield and €9.8bn into global funds.

North American equities products also drew strong interest in April, according to Lipper.

Another strong trend evident on the Continent was selling of cross-border funds, where activity “came roaring back in April” with €21.8bn of net sales.

Italian, Dutch and Spanish investors all accelerated withdrawals from local products.

For internationally marketed funds, bond sales were strongest (€10.6bn), followed by equities products (€7.8bn).

David Walker

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