European mutual fund flows have shown a remarkable increase during 2014, according to Lipper’s European Fund Market Mid-Year Review 2014.
Total European net sales of €252bn into mutual funds are up 34% from the entire sales figures for 2013 (€188bn) and currently represent the highest sales figure since 2006 (€372bn).
Cross-border funds took the lion’s share of sales (€171bn) YTD, but domestically, Italy and Spain have led the pack with a combined €40bn and the United Kingdom took the bronze medal at €13bn.
The report also showed that, despite an improving environment for equity funds, bond fund flows have dominated, dispelling last year’s fears of a bond bubble. Flows of €114bn have flowed into bond funds, outstripping equity fund flows of €61bn, and bond fund flows appear to be on track to surpass 2012’s bumper year.
The other notable development is the rise of flows into mixed-asset funds, with €62bn of sales, beating equities into second place.
Interest in commodities funds, which lack support from a rising US dollar, has been paltry at €53m YTD, continuing on from a poor 2013 (-€7bn).
In the introduction, Lipper commented: “The time when markets were preoccupied with a Greece default, the breakup of the euro, and the global impact of a potential Chinese hard landing all seems a distant memory. The year 2014 has been dominated by the repercussions from the May 2013 ‘taper tantrum’ and the preoccupation with inflationary expectations and the responsibilities of the world’s central banks.
“Despite discussions of credible withdrawal of the US Federal Reserve’s ‘quantitative easing’ plan, the falling yields in government bonds in January 2014 surprised many investors with the ‘pain trade.'”
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