European equity funds had a fourteenth straight month of net inflows. Investors poured in a net €2bn, despite the fact that markets were heading in a downward direction for much of the month. However, the uncertain market conditions had some impact on flows, as net inflows into European equity funds were less than a third of those during the previous three months.
Everything is going down…
But not only flows into European equities decreased. In every single asset class net flows went in a downward direction, suggesting overall investment sentiment is souring. This was confirmed by the outcome of the State Street Investor Confidence Index earlier this week, which registered a strong drop in sentiment among European investors. In fact, the last time fund flows went down in concert was, exactly, in September 2008…
European equities, long/short equity and multi-strategy funds were the only asset classes seeing material inflows in January. These happen to be exactly the three asset classes European fund buyers have been most positive about in recent months. Long/short and multi-strategy funds are being regarded as a safe bet because their managers can hedge their positions, and European equity funds are seen as attractive because they are thought to benefit from a Q€ windfall. High yield bonds, Asian equities and emerging market debt all saw net outflows in excess of €3bn.
