European investors shifting bond focus towards the US
From Products Jan 12 2012 BY: Gary Corcoran
, Group Editor
, Portfolio Adviser and International Adviser
European investors showed their true colours in November last year by moving away from a domestic bond allocation in favour of the US, a trend that has been bubbling under for the past few months.
According to the latest figures from Lipper, European investors moved $750m into dollar-denominated bond funds across government, corporate and short-term holdings, as well as a further $12.5bn into dollar-denominated money market funds. They also took €10.8bn out of euro-denominated bonds.
Overall, fixed income funds suffered more than their equity counterparts for the first time since April last year, with net withdrawals of €13.6bn and €10.5bn respectively.
Investors’ continued reticence over any kind of ‘risk’ asset saw a further €18.3bn piled into money market funds across the Continent. These inflows helped the European funds industry during the month see outflows of ‘only’ €9bn, the best figure for six months.
Looking at specific products, absolute return tell a good news/bad news story, with mixed asset/asset allocation funds attracting €500m (taking the year-to-date total to €8.5bn) but absolute return bond funds losing €750m (-€1.7bn YTD).
With December’s figures still to be collated, the pattern for 2011 is still set, with a divide between markets where investors were either the greatest net buyers ((Switzerland, UK and cross-border) and huge net sellers (France, Italy and Germany).