Investors return to bonds instead of equities

RotationBond funds increased their share of investor flows in March, a fact which seems to pour more cold water on the 'great rotation' idea of a wholesale move towards equities started by recent stock market highs.

Net inflows into bond funds rose by more than half, compared with the previous month, to €17.3 billion, according to data provider Lipper. Meanwhile, net inflows into equity funds fell by more than 40% to €5.6 billion during the month.

More data from analytics firm EPFR Global suggests a continued investor preference for fixed income. Bond funds tracked by the US-based firm recorded net inflows of $13 billion, compared with $10.5 billion (€8 billion) for equity funds in the week ending May 8.

Ed Moisson, Lipper's head of UK and cross-border research, says the bond fund inflows were “largely the result of continued appetite for global, emerging market and flexible products, while inflows to high yield funds have bounced back from last month's lull to reach €4.4 billion this month [March]”.

Lipper says March brought a milestone for absolute return funds. These products, which aim to provide positive returns in all market conditions, now have more than €200 billion under management.

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