Investors withdraw from Ucits funds against volatility – EFAMA

Triggered by fears over market volatility, investors withdrew from Ucits fund investments in March, as equities, bonds, money market and long term funds were hit by redemptions, monthly research from the European Fund and Asset Management Association (EFAMA) has shown.

The combined impact of unrest in the Middle East and North Africa, devastation in Japan, a spike in the price of oil, and revived fears over a Eurozone crisis led to net sales of long term Ucits funds dropping off for the first time since May last year. At that time, investor confidence was knocked by troubles in the Eurozone including Greece’s bailout.

In March 2011, redemptions of long term funds were €3.4bn, against sales of €19.2bn in the previous month and sales of €38bn in March last year.

Equity fund Ucits suffered the next highest level of redemptions, with €14.5bn pulled out of the asset class. Sales fell from €3.7bn in February to -€10.8bn in March. Equity fund redemptions again echoed activity seen in both May and June of last year, when market uncertainty spooked investors.

Money market funds, one of the more volatile asset classes tracked by EFAMA over the past year, lost €6bn in March against sales of €8bn in February. The redemptions reflect data recorded by Lipper for March, showing €7.3bn was withdrawn from money market funds in that month due to French investors’ cyclical redemptions, and adding to an overall drop in fund sales also driven by a move away from equities.

While by Lipper data bond fund sales shot up in March to their highest level since October 2010, EFAMA data for Ucits funds showed bonds lost €4.5bn between February and March this year. Over the past year, sales of Ucits bond funds have fallen negative in four different months, including May and June of 2010.

Balanced funds were only type of Ucits that recorded net sales in March, excluding fund of funds and investments not categorised as bonds or equities, with sales of €6.6bn, despite being slightly lower than in February when sales were €8.8bn.

Sales of non-Ucits funds also fell overall from €9.3bn in February to €9.3bn in March, driven mainly by redemptions from real estate investments and slightly lower sales of special funds reserved for institutional investors. Other non-Ucits funds gained somewhat, with sales rising from €0.3bn in February to €1bn in March.

By net assets, Ucits funds held €5,838bn at the end of March, a decrease of 1.4% against the previous month. Total assets of non-UCITS also reduced slightly month-on-month, by 0.3% to €1,956bn.

EFAMA surveyed 23 of its member associations that collectively represent 97% of total Ucits and non-Ucits assets.

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