Interest rate fears drive bond fund resurgence

Ucits funds received overall net inflows of €44 billion in the second quarter of this year, against net outflows of €5 billion the quarter previous.

European Fund and Asset Management Association (Efama) figures for Q2 2016 show equity funds continued to suffer the most of any fund asset category, with net ouflows rising to €18 billion from €4 billion in Q1.

Conversely, bond funds rebounded strongly, with net inflows rising to €42 billion after three consecutive quarters of negative net outflows.

Multi-asset funds also performed positively, with inflows of €14 billion, up from €6 billion in the first quarter.

Among major Ucits domiciles, Ireland’s funds saw net inflows of €52 billion, the highest for any location. Net inflows were also modestly positive in Germany (€3.2 billion). The biggest losers were France and the UK, with funds losing €11.4 billion and €4.7 billion, respectively, primarily due to equity fund outflows.

The number of Ucits funds slightly increased from 30,168 at end March 2016, to 30,274 at end June 2016.

Bernard Delbecque, senior director for economics and research at Efama, attributed the significantly increased demand for bond funds to the current low interest rate environment across Europe and renewed expectations of further falls in interest rates.

©2016 funds europe

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