European investors remain in risk-off mode as money market funds recorded net inflows of €11 billion throughout April, according to data provider Refinitiv Lipper.
The data analyst’s European Fund Flow Report for April, which was released last week, found money market funds were the best-selling asset type for the second consecutive month, followed by bond funds, which reported net inflows of €8.6 billion.
Bond funds have also recorded the highest net inflows overall for 2023 so far, with reported inflows of €63.7 billion.
According to Lipper, the high inflows into bond funds suggests European investors may be anticipating a possible end to the interest hiking cycle of central banks.
Detlef Glow, head of research at Refinitiv Lipper Emea, said: “It is not surprising that European investors bought money market products since the Eurozone has an inverted yield curve, which means that money market products offer a higher yield than medium or long-term bonds.”
The report also revealed all other asset classes faced outflows throughout April, and mixed-asset funds recorded the highest outflows at €4.4 billion, followed by alternative Ucits funds, which reported net outflows of €2.5 billion, and equity funds with net outflows of €1.4 billion.
ETFs recorded net inflows of €50.6 billion over the course of the first four months of 2023, whereas mutual funds faced outflows of €1.2 billion so far.
According to the report, high inflows into ETFs and significant outflows from mutual funds is a common trend seen during other periods of market volatility, such as the financial crisis or the euro crisis.
Glow added: “It was not surprising that April 2023 was, in general, a positive month for the European fund industry given the rather positive revisions of the economic outlooks for the major economies globally and a possible end of the interest hiking cycle of central banks in the near future.”
Continued high inflows into ETFs support Refinitiv Lipper’s findings that the industry is set to double in size from €1.2 trillion at the end of 2022 to €2.5 trillion by the end of 2030.
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