Strong redemptions hit equity funds in both Germany and the UK in April, as investors sought to distance themselves from Europe's economic troubles, according to the latest fund industry data from Lipper.
Strong redemptions hit equity funds in both Germany and the UK in April, as investors sought to distance themselves from Europe’s economic troubles, according to the latest fund industry data from Lipper.
Destpite bond fund sales in Germany being half those of the UK, investors in each country withdrew a net €200m from equity funds over the month, as European fund industry sales trends highlighted bond funds sales dominating sales activity.
Flows into the European funds industry reached a net €20.3bn in April, taking the year-to-date total to €112 billion. April saw inflows of €11.1 bn, with €8.2bn related to cross-border funds; €1.6 billion in to the UK market and €790m to Germany.
The UK was ahead compared to Germany in terms of both estimated net sales and total net assets in April, recording €2.6bn and €731.9bn, respectively. In contrast, Germany recorded €748.1m in estimated net sales and total net assets of €438.4bn.
Redemptions of €8bn from equity funds represented the biggest drag on sales sales of cross-border funds. Ed Moisson, head of UK and Cross-Border research said: “One interesting twist on the disappointing, although unsurprising, equity figures is that ETFs were a significant drag on this total, with redemptions from equity-based ETFs totalling -€4.5bn, 56% of the equity total.
€4bn was withdrawn from one ETF, iShares DAX, alone. Stock market fears hit cross-border funds particularly badly, with outflows from the asset class of €7.7bn, resulting in sales of long-term cross-border funds this month reaching just €380m.”
Estimated net sales for funds in Switzerland and the United Kingdom reached €3.53bn and €2.59bn respectively, helping to drive sales of non-euro zone mutual funds to their highest level since December 2010, Lipper data shows.
Germany is the only eurozone country to feature in the top five fund markets in April. Its funds sector achieved €750m of net sales, with Denmark in fourth place with €270m.
Eight actively managed funds attracted inflows in excess of €400m in April, led by AllianceBernstein’s American Income Portfolio which reported €500m in inflows. UBS was the best performing at a group level as two of its institutional index tracking funds collected €3 billion in inflows, more than both Allianz/Pimco (€1.8bn), and Axa (€1.2bn).
The UK’s total net assets jumped 11.3% month-on-month, to €732bn, while the French and Italian funds industries shrank by 9.7% and 3.2% respectively over the same period.
The Lipper report comes as a research report by Bank of America Merrill Lynch Global Research found that 11% of its global panel believes that the global economy will deteriorate in the next 12 months.
The biggest risk to investors is the European sovereign debt issue, with many looking towards policy responses to be put in place in order to bring back investor confidence. The report suggests that investors have become even more prone to risk aversion, and are willing to sit on cash balances until further decisive policy responses are made.
Average cash balances are at their highest level since the depth of the credit crisis in January 2009, at 5.3% of portfolios, up from 4.7% last month.