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May 2022 worst month for outflows since Covid outbreak

EUEuropean long-term funds experienced €15.8 billion of net outflows in May this year, the worst monthly result in terms of flows since March 2020 according to Morningstar.

During this month fixed income funds were particularly hard hit, and recorded €16.5 billion in net outflows for the month. Meanwhile, money market funds lost €10.5 billion in May, and commodities lost €1.6 billion.

However, equity funds recorded a net of €2.9 billion in new net subscriptions for May, while allocation funds attracted €987 million.

There were also mixed results for ESG strategies, with Article 9 funds that are impact and ESG centred attracting net inflows of €8.5 billion. Long term Article 8 funds, those which are ESG-linked, overall lost €4.5 billion.

Valerio Baselli, EMEA investment specialist at Morningstar, said: “Soaring inflation, along with growing recession fears and great uncertainty surrounding the war in Ukraine, is turning investors’ sentiment sour. Long-term Europe-domiciled funds shed €15.8 billion in May, the worst monthly result in terms of flows since March 2020. This owed primarily to strong redemptions from fixed-income products.

“At the same time, investors poured €2.9 billion in equity funds last month, a modest result if compared with the average of the last two years but one that allowed the global category group to stay in positive territory. Global large-cap blend, water, and ecology funds were the main beneficiaries, as well as income-equity funds.”

From an asset manager perspective, Aviva, BlackRock, and Lantern Structured Asset Management suffered the biggest redemptions in May.

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