Risk Appetite Returns to Europe

European investors are buying into equity funds and emerging markets, according to the latest Morningstar asset flows data

Dan Lefkovitz 28 February, 2012 | 6:21PM

Buoyed by strong market performance, European investors turned positive on funds in January. Long term funds captured EUR 13 billion in net new assets in January 2012. Money market funds attracted EUR 9 billion. The European funds industry still has a long way to go to erase 2011’s outflow of more than EUR 120 billion, but 2012 is off to a good start.

Strong flows to money markets could be related to what is known as the ‘bed & breakfasting’ phenomenon,where French institutions withdraw capital from short-term funds in December for tax reasons, then reinvest. This would explain the outflows from BNP Paribas and Amundi’s money market funds in December and their strong inflows in January. European money market funds likely benefited, too, from a shift out of longer term Euro-denominated debt, as the Eurozone crisis drags on.

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About Author

Dan Lefkovitz

Dan Lefkovitz  is strategist for Morningstar’s Indexes group

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