Investors Scared off Markets by Volatility

Following two high profile fund manager exits and a summer of stock market volatility, fund investors in European equities fled at an even quicker pace than August’s selling spree

Ali Masarwah 3 November, 2014 | 3:20PM
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Rising anxiety about the predicament of the European economy, jittery credit markets and the exit of several prominent fund managers – Bill Gross being the most prominent – sparked a sell-off in a number of equity and bond fund segments, thus compressing inflows into European open-end funds in September to a relatively modest €20.3 billion. The risk-off mode among European fund investors is shown by outflows of €2.3 billion from equity funds and €4.8 billion out of US and global high-yield bond funds. Inflows into EUR diversified and EUR flexible bond funds offset these outflows from high-yield bond categories and PIMCO´s bond fund range, bringing bond inflows to a relatively moderate €7.1 billion.

Allocation funds topped the list among all broad asset categories in September, raking in €13.1 billion on the back of increasing demand for European cautious and moderate allocation funds. Alternative funds enjoyed inflows of €3.2 billion with €1.6 billion being sent into the alternative multistrategy category – yet another indicator of the high level of demand for broadly diversified asset allocation funds in Europe.

Money market funds did not profit from risk aversion among fund investors. These short-term vehicles suffered redemptions of €8.8 billion as the European Central Bank (ECB) unexpectedly cut interest rates at the start of September. The ECB also announced a purchase program for asset-backed securities to counter deflationary risks for the eurozone economies. On a country level, the highest outflows – €15.9 billion – were seen among money market funds domiciled in France.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Schroder UK Opportunities A Acc4.20 GBP1.85Rating

About Author

Ali Masarwah

Ali Masarwah  is the editor of Morningstar.de in Germany.

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