Positive sentiment drives up demand for UCITS funds, Efama reports

A continued increase in optimism on the economic outlook since the end of 2012 by reduced tensions in the euro area sovereign debt markets and rising stock markets is supporting equity funds in attracting their highest level of monthly net inflows since January 2011, according to the latest data provided by the European Fund and Asset Management Association (EFAMA).

In its latest Investment Fund Industry Fact Sheet, EFAMA found that in December 2012 long-term UCITS continued to register strong net sales in December: €35bn.

Net sales of equity funds totaled €14bn, up from €13bn in November.

Bond funds continued to record strong net inflows in December of €14bn compared to €21bn.
Balanced funds recorded a rise in net sales to €7bn, up from €3bn in November.

Net inflows into UCITS amounted to €1bn in December, down from €38 billion in November.

This drop came on the back of large net outflows from money market funds.
Money market funds suffered from considerable net outflows (EUR 33 billion), which can be explained by cyclical end-year withdrawals.

Overall, UCITS and non-UCITS recorded net inflows of €331bn and net assets of UCITS and non-UCITS increased to €8,872bn.

According to Peter de Proft, director general at EFAMA, 2012 was a good year for the European investment fund industry and its clients, thanks to improved financial market conditions.

“The strong demand for UCITS may be attributed to the decisive policy measures taken by the ECB and its commitment to do “whatever it takes” to save the euro. Progress in reducing fiscal imbalances and strengthening the governance of the euro area also supported investor confidence,” he said.

He added: “Overall, bond funds were the big winner as investors searched for yield in a sustained low growth, low interest rate environment. Equity funds have only benefited from improved investor confidence at the end of the year. This explains why they only attracted €2bn in new money in 2012. Still, this is a much better outcome than in 2011, which saw equity funds recording net withdrawals of €70bn.”

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