European investors return to bond funds

Bond funds saw net inflows of €4bn in December, the first time similar inflows have been recorded since July 2011, while long-term Ucits and equity funds saw limited outflows as investor confidence returned.

Total assets of Ucits increased by 2.2% to €5.54trn and non-Ucits by 2.7% to €2.2trn in December, data from the European Fund and Asset Management Association (EFAMA) shows.

Withdrawals from long-term Ucits slowed down from €29bn in November to €7bn in December. Efama said this was the result of improving investor sentiment following measures taken to support euro area banks and strengthen fiscal discipline.

Overall net outflows from Ucits slowed down in December to €6bn, from €9bn recorded in November.

Equity funds recorded a sharp reduction in net outflows during the month of €6bn, compared to €16bn in November.

Managers and investors are gaining confidence low equity valuations may offer an investment opportunity. French group Carmignac recently said it would increase its exposure to the asset class, while Edmond de Rothschild Asset Management launched a eurozone equity fund.

Net sales of balanced funds weakened in December with net outflows of €3bn, down from breakeven point in November.

Money market funds registered net inflows in December of €1bn, down from €20bn in November. Non-Ucits saw net sales of €15bn in December, up from €11bn in November.

Special funds reserved to institutional investors experienced an increase in net inflows to €13bn in December, up from €10bn witnessed in November. Overall special funds received net inflows of €93bn in 2011, up from 2010 when they received €144bn.

Brussels-based Efama gathers net sales and/or net assets data from 24 associations representing more than 97% of total Ucits and non-Ucits assets.

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