European outflow spree spreads to government bonds

Added 22nd November 2016

European equities are now on their longest net outflow streak since 2012. But it is not just equity funds that are being sold off. Bond funds are also under increasing pressure.

European outflow spree spreads to government bonds

European equity funds saw net outflows of €4.5bn (£3.9bn, $4.8bn) in October with, as usual, actively managed funds taking the biggest hit.

Year-to-date, investors have taken out a net €70.4bn from European equities, with €56.9bn of that coming from actively managed funds.

UK equity funds were particularly hard hit, seeing their highest net outflows since March 2015 and accounting for more than half of total net outflows from European equities.

But European investors are not selling just equities. The sell-off has spread to Eurozone government bonds, which saw their highest net outflows since June 2015: €2.4bn.

While European equities and bonds were sold off, their emerging market equivalents continued to see net inflows. Emerging market equities were the best-selling asset class in October, seeing €3.7bn in net inflows.

The figures are consistent with asset allocation sentiment data gathered by our sister publication Expert Investor recently.

These data show appetite for government bonds is almost non-existent and demand for European equities is cooling down. By contrast, emerging market equities and bonds are in vogue.

It remains, however, to be seen whether the election of Donald Trump will also disrupt these fund flows trends.

Preliminary data have already suggested emerging markets have been hit by outflows since 9 November. 

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Tjibbe Hoekstra

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Tjibbe joined Expert Investor as a senior reporter in March 2014. Before moving to London he worked as a financial news reporter for various news outlets in Amsterdam, including Reuters and ANP, the main news agency in the Netherlands. He also worked for Fondsnieuws, a website and magazine for finance professionals in the Netherlands. Tjibbe holds a MSc in Public Administration and a post-graduate diploma in Journalism.

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