Bond withdrawals at a high pace

WithdrawalEuropean investors “continued to draw assets out of fixed income funds at a pace not seen in years” in September, Morningstar data shows.

Following on from outflows of €17.6 billion in August, the asset class lost an additional €16.3 billion in September.

Rising credit spreads hurt corporate bonds, and worries of a stark slowdown in China weakened emerging market bonds.

The past quarter has seen the largest quarterly outflows for European fixed income funds since the financial crisis of 2008.

Matias Möttölä, manager research analyst for Morningstar, says: “Worst-hit during the quarter were emerging markets bond funds of all types, with funds focused on renminbi bonds seeing the highest outflows in relation to their size. Developed markets fixed-income funds with exposure to corporate bonds also experienced sharp outflows as credit spreads rose globally.”

Equity funds saw inflows, which represented a turnaround since August when €20 billion was withdrawn due to market turbulence.

Through the first nine months of the year, Aberdeen Asset Management saw the largest redemptions in relative terms among the larger asset managers. The firm’s organic growth rate reached negative 17.7% for the year to date through September.

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