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Asset allocators and “alternatives” lead Europe fund flows

graph up downAsset allocation funds sold in Europe saw increased flows in May, while sales of equity and bond funds reduced and money market funds suffered considerable outflows, according to Morningstar.

Money market funds saw €13.55 billion flow out, making May the first negative month of 2015 for these short-term cash vehicles. Withdrawals were seen from global, European and UK-focused money market funds.

In contrast, asset allocation and “alternative” funds – such as absolute return vehicles – drew inflows of €15.87 billion and €7.09 billion for the month, with particular demand for asset allocation funds in Italy, Spain and Germany.

Amongst alternatives, multi-strategy funds saw €3.02 billion in inflows, consistent with a strong performance across the year so far. Examples include the Standard Life Investments Global Absolute Return Strategies and the Invesco Perpetual Global Targeted Returns, which attracted considerable net new money.

Both asset allocation and alternative funds have seen good growth through 2015, attracting investors as they move away from European bond funds, which saw volatility spikes in April.

Investor interest in both bond and equity funds has waned as fears of a ‘Grexit’ continue to build and bond yields fluctuate. Bond funds saw significantly reduced net inflows of €5.54 billion in May and euro diversified bond funds in particular suffered the worst month on record, with outflows of €2.64 billion.

Actively managed equity funds saw the greatest outflows and open-ended equity index funds also lost €160 million. The outlook for equity exchange-traded funds was more positive, with inflows of €540 million.

Overall, May brought the lowest inflows for long-term funds so far this year, at only €28.51 billion, compared to the long-time high of €52.21 billion in February.

©2015 funds europe