Europe’s investors return to long term funds – Morningstar

Fund flow data from Morningstar suggest that investors across Europe have come back to long term mutual funds, as inflows of €26.8bn in July replaced outflows of €35bn seen in June.

According to the data, all categories of long term funds saw inflows through the month – although property and commodity funds continued to suffer net outflows.

The provider that did best out of the reversal in flow trends was BlackRock, which saw net inflows across equity, bond and allocation funds hit €2.2bn, Morningstar said.

Its July data also pointed to equity funds taking the biggest share of new assets, with €10.2bn in net inflows.

US large cap blend and global equity income were the most popular equity fund categories, attracting inflows of €5.4bn and €10.8bn respectively.

Fixed-income funds saw inflows of €5.5bn. This was the lowest recorded since May 2012. However, investors moved up the risk curve, with high yield bond fund categories attracting strong inflows. Dollar high yield bonds attracted €3.5bn, and global high yield bond funds some €2.1bn. But both euro and dollar diversified bond categories saw outflows of €1.7bn.

Money market funds saw July outflows of €1.1bn.

Just three of the biggest European asset managers saw outflows over the month, including PIMCO (€-1.4 bn), driven by redemptions of €1.2bn from the PIMCO GIS Total Return Bond Fund, Morningstar said. UBS and BNP Paribas were the other two.

In terms of individual funds, the data suggested that Standard Life Investment’s Global Absolute Return Strategies (GARS) had another month of positive inflows, as investors added a total of €627m to both versions of the fund, despite the news of Euan Munro’s resignation from the group.

DWS, Germany’s largest open-end fund provider, saw the bulk of its inflows go to the DWS Vermögensbildungsfonds I and DWS Akkumula equity funds, which have a new manager.

Seven of the top 10 biggest providers have assets of €100bn or more, the data suggest.

Ali Masarwah from Morningstar’s European Fund Flows team said: “Although flows into fixed-income funds recovered somewhat, last month’s inflows of €5.47bn were a far cry from the huge demand for bond funds over the previous 18 months. Last month in particular, diversified bond funds and euro government bond funds fell out of favour, while high-yield and short-term bonds carried the day. Arguably this reflects investors´ preference for the less interest rate sensitive credit and shorter-duration investments in times of rising interest rates.”

Morningstar’s full report on fund flows is available here: European Investors Flock Back to Long-Term Funds



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