Cautious investors pile into bonds

13.10_Arrow_upInvestors have remained cautious as they piled into fixed income and money market funds in August this year. Though equity funds saw close to zero inflows, Ucits funds overall saw significant inflows of €54bn over the month. The latest data from the European Fund and Asset Management Association (Efama) showed that there was a strong demand for fixed-income funds in August against the backdrop of close-to-zero net sales of equity funds. This suggests that investors have remained cautious about the world economic recovery and the risks of a double-dip recession.
Throughout August, Ucits funds experienced inflows of 54bn, which was a considerable leap from the €5bn in inflows seen in July. According to Efama, this development reflected a strong rise in net sales of long-term Ucits, excluding money market funds, and an upturn in net inflows into money market funds.
The month was particularly good for long-term Ucits funds which saw new inflows of €38bn. This was the highest level of net sales seen since Efama began collecting the data in October 2008.
Bond funds contributed strongly to the large rise in long-term Ucits, with net inflows jumping from €9bn in July to €23bn in August.  Balanced funds also saw their net sales increase in August.  On the other hand, investor demand for equity funds weakened, despite positive indicators for economic growth in the euro area as well as some strong corporate results.
Money market funds also saw inflows reaching 16bn in August. Furthermore, special funds reserved to institutional investors continued to record large net inflows in August; €11bn compared to €7bn in July. Efama found that total assets of Ucits and non-UCITS increased by 2% in August, compared to end July, to reach €7.5trn.  

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