Investors shun European equity funds

europe_globe_410European equity funds suffered further redemptions in July making ETFs and bond funds the mainstays of the industry, according to Lipper.


As Europe failed to tackle its debt problems, bear market fears have grown in recent months and caused investors to channel their cash into less risky assets.

Lipper’s latest fund flows statistics show equity funds were hit worst, suffering redemptions of €6.5 billion. When the positive impact of equity-based ETF sales if €5.3 billion is included, the total loss for the asset class was with €1.2 billion less dramatic.

Bond funds, on the other hand, feared relatively well. Investors showed appetite for emerging, global and high yield bond funds. Assets under management were up by €29.2 billion and net sales accounted for €5.5 billion.

“This bond bulwark was not sufficient to prevent a flood of money pouring from most other asset classes,” says Lipper. “Even though the outflows are not as severe as may have been expected, mutual funds are still not being used to a significant degree by those seeking safe havens.”

Absolute return funds saw their first month of outflows this year, totalling €580. Investors also withdrew €22.5 billion from money market funds, taking the industry activity across asset classes into the red.

©2011 funds europe