Fund flows start strong in January, says Morningstar

Thumbs_up_hopeEuropean long-term funds, excluding money market funds, attracted €13 billion in net new assets in January, according to data provider Morningstar.

The positive start to the year will go some way towards offsetting net outflows of nearly €120 billion in 2011.

The biggest casualties last year were equity funds, which had net outflows of €70 billion, while fixed income funds had net outflows of €44 billion. But in January, equity funds had net inflows of €3.5 billion and fixed income funds attracted net new assets of nearly €7 billion.

January was the first month since July 2011 that the fixed income category gained net new money, said Morningstar. Within that category, funds that promised high returns were favoured.

“A hunger for yield was evident,” wrote Dan Lefkovitz in Morningstar's European research team. “Just as they did in 2010 and early 2011, European investors flocked to corporate debt – especially of the high-yield variety.”

Money market funds attracted net inflows of €9 billion January. Unlike long-term funds, these products had relatively low net outflows of €6 billion in 2011.

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