Investors move to safer assets in May, Morningstar reports

Investors shifted towards safer assets in May, according to the latest data published by Morningstar on European asset flows.

“With the eurozone crisis roiling markets, long-term funds in the database saw net outflows of nearly €9bn during the month. Conversely, investors deposited some €15bn into money market funds and €855m into allocation funds,” Morningstar said.

Equity funds sustained the greatest outflows, shedding €12.5bn in investor assets; alternatives-focused funds reported €1bn outflows and bond funds suffered their weakest month year to date, but still benefitted from May’s risk aversion, receiving nearly €5bn inflows.

“The USD money market-short term category collected inflows of €11bn, making it the most popular of Morningstar’s money market categories, funds in the euro money market category took in €7bn and Morningstar’s GBP short-term money market category saw outflows of €4bn,” the company said.

The flight to safety also saw flows to the global emerging markets equity category turn negative for the first time since November 2011.

Among emerging markets equity funds, Luxembourg-domiciled Aberdeen Global Emerging Markets was the most notable casualty. Before May, the fund enjoyed inflows in 34 of the 35 previous months, but suffered €220m in net investor redemptions in May.

Europe’s largest long term fund, Templeton Global Bond, saw its ninth consecutive month of outflows in May. By contrast, PIMCO GIS Total Return Bond attracted nearly €800m in May, the fund’s strongest month of inflows since October 2010.

“Market turmoil triggered real risk aversion in May, with European money flowing into money market funds and out of emerging markets stocks and bonds. Nevertheless, the flight to safety is not as pronounced as in August 2011, when European investors pulled €25bn from the broad asset class, or September 2011, when €13bn was redeemed,” said Dan Lefkovitz, of Morningstar’s European research team.

He added: “However, May’s outflows have erased what had been mildly positive flows to equity funds during the first four months of the year,”

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