Data shows rotation to equities in third quarter

graph up downNewly released data shows how a suggested rotation from bonds to equities gathered pace in the third quarter of 2013.

Worldwide equity funds took in €61 billion in net new money in the third quarter, figures from European Fund and Asset Management Association (Efama) show. This is more than double the previous three months. In contrast, bond funds suffered a net outflow of €37 billion in the third quarter, their first loss since 2008.

Investment fund assets stood at €23.4 trillion by the end of September, says the data, nearly 2% more than at the end of June.

The expectation of tapering by the US Federal Reserve, ultimately announced in December, may have driven the shift from bonds to equities. Bond funds underperformed after the markets began to anticipate the Fed winding down of its quantitative easing programme, which injects liquidity into the markets by buying US government bonds.

The outflows from bond funds ensured the third quarter was only moderately pleasing for fund companies. Net inflows into long-term funds – all funds except money market funds – were €100 billion in the quarter, below the €193 billion figure seen in the prior three months.

However, money market funds had a good quarter. They attracted a net €81 billion, compared with a net outflow of €84 billion in the prior three months.

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