European open-ended funds posted inflows of €26.8bn (£22.75bn, $35bn) in July, reversing the sentiment shown in June 2013, when investors withdrew some €35bn from long-term funds.
Besides property funds and commodity funds, which suffered net outflows, all long-term categories saw inflows in July, with equity funds leading the way.
Equity funds enjoyed the largest individual share of new assets in July, with some €10.2bn in net new money; US large-cap blend and global equity-income were the most popular equity fund categories, collecting inflows of €5.4bn and €10.8bn, respectively.
High-yield bond fund categories also saw their greatest inflows after suffering huge redemptions in June amid reports that the US Federal Reserve was to phase out its bond buying or so called “quantitative easing” programme.
The European Central Bank’s subsequent reassurance that it had no plans to raise interest rates in the foreseeable future appears to have helped allay market anxiety, with the Morningstar US dollar high-yield bond category seeing inflows of €3.5bn; inflows into global high-yield bond funds reached €2.1bn in July. Conversely, the euro and US dollar diversified bond categories were the least-favoured in July, each seeing outflows of €1.7bn.
Fixed-income funds saw inflows of €5.5bn, the asset class’s lowest monthly inflow since May 2012.
According to Ali Masarwah from Morningstar’s European Fund Flows team, while flows into fixed-income funds had recovered, last month’s inflows of €5.47bn were a far cry from the huge demand for bond funds over the previous 18 months.
“Last month in particular, diversified bond funds and euro government bond funds fell out of favour, while high-yield and short-term bonds carried the day. Arguably this reflects investors’ preference for the less interest rate-sensitive credit and shorter-duration investments in times of rising interest rates,” he said.
BlackRock stood out as the big winner for July, with net inflows across equity, bond and allocation funds of some €2.2bn. Of the largest European asset managers, only three saw net outflows in July. PIMCO suffered the most with outflows of €1.4bn, driven by redemptions of €1.2bn from the PIMCO GIS Total Return Bond Fund.
