Fund Investors Embark on Selling Spree

Investors in funds have been redeeming their investments at a rapid rate amid concern over rising rates and the Fed's expected tapering

Ali Masarwah 30 September, 2013 | 1:42PM
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Europe's fund industry has been reeling from investors' change in sentiment in the past three months. Since the Federal Reserve laid out its timetable for the tapering of bond buying (commonly known as QE3) at the end of May, investors have embarked on a selling spree, redeeming long-term funds on a substantial scale.

In August alone, the European fund industry was hit with outflows from long-term funds to the tune of EUR 2.1 billion. Bond funds suffered most with investors withdrawing EUR 7.9 billion. Equity funds saw net redemptions of EUR 683 million. Demand for allocation funds was solid at EUR 4.3 billion, as were inflows into alternative funds that pursue hedge fund-like strategies. Net inflows into this latter asset class slowed to EUR 1.4 billion in August.

While long-term funds suffered outflows in August, money market funds profited from the ‘risk-off’ mode, enjoying net inflows of EUR 7.9 billion after seeing net redemptions for four months running. Due to practically non-existent returns, these short-term products have seen outflows of EUR 23.3 billion so far in 2013 and EUR 45.5 billion in the past 12 months.

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About Author

Ali Masarwah

Ali Masarwah  is the editor of in Germany.

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