Investors tempted by money market funds

currency banknotes 410Investors “could no longer resist the allure of money market funds” so the asset class saw net sales of €28.3 billion, according to Lipper’s latest snapshot of European fund flow trends.

This inflow into money market funds reduced overall outflows from the industry across all asset classes in August, totalling €25.6 billion. August was the third month in a row that outflows have been higher than €20 billion.

Long-term funds, excluding money market funds, suffered redemptions of €53.8 billion. This was the worst month since October 2008. Equity funds lost €31.2 billion, bond €13.9 billion and mixed asset funds €3.7 billion.

“Investors’ fears were focused on equity funds as stock markets plunged in both developed and developing economies, but even bond funds endured panicked clients heading for the lifeboats,” the report says. Apart from clinging to the lifebelt offered by money market funds, apparently the most popular sector this month was German equities.”

The report adds that exchange traded funds might have been used to short the Dax, Germany’s main stockmarket index. The only other sector that attracted investor interest was gold.

Local Swedish products, as well as global emerging and Asian bonds, also some interest from investors. Overall, however, this was not enough to balance severe redemptions from other sectors.

©2011 funds europe