Storm clouds

Storm_cloudsUcits funds have seen a surge in net inflows in March, totalling €47 billion, up from €19 billion in February, according to the European Fund and Asset Management Association.

This was partly because worries about the stability of the eurozone had eased in the early months of this year.

Whether this positive sentiment will last remains to be seen, considering the ongoing political changes the eurozone.

Referring to March’s numbers, Bernard Delbecque, director of economics and research at the association, said the surge in demand for Ucits was owing to the “easing of tensions” in bond markets.

At the end of February the second European Central Bank long-term refinancing operations had been agreed upon, following by the completion of the Greek debt restructuring in early March. Both factors, Delbecque said, had an impact on bond fund numbers.

Net sales of long-term Ucits were €32 billion in March, compared to €18 billion in February. Bond funds saw €26 billion of net inflows, up from €9 billion, and money market funds €15 billion, up from €1 billion.

Since these net sales figures had been collected, however, much has changed in the eurozone. Both France and Greece have held elections, with France seeing a change of leadership and Greece has failed to form a government.

François Hollande, the socialist who will be France's next president, will meet German chancellor Angela Merkel this week to discuss the eurozone crisis. There is still uncertainty to which extend, if at all, Hollande can renegotiate the deal Merkel made with his predecessor Nicolas Sarkozy.

Troubled Greece, on the other hand, is still in disarray following its inconclusive election, which left parliament divided. In order to avoid having to hold new elections, Greek president Karolos Papoulias has called the country’s four main parties to form an emergency government.

©2012 funds europe