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European funds suffer worst month since financial crisis

coronavirus_crisisEurope domiciled long-term funds suffered record outflows throughout March – a month defined by Covid-19 caused market volatility.

Net redemptions reached €246 billion – “a staggering number that dwarfs even the darkest month of the 2007-09 financial crisis”, said Morningstar, which published the data.

The worst month of the previous financial crisis was October, when investors withdrew €108 billion from long-term funds.

This time round, as the Covid-19 death toll continued to rise worldwide, bond funds shed an “unprecedented” €140 billion, whilst equities suffered redemptions of €56 billion.

Ali Masarwah, Morningstar’s director of regional editorial research, comments: “While investors reacted to the spread of the coronavirus with a certain sluggishness in February 2020, Covid-19 wrought havoc in Europe's fund market in March."

US dollar government bond funds were the most sought-after products in March, with €4.6 billion of inflows. Products offering exposure to precious metals also attracted more than €4 billion of inflows.

Valerio Baselli, senior editor, regional editorial research, said: “In the most volatile month in history, investors sought safe havens.”

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