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European equity redemptions accelerate further

Net outflows from European equity funds broke a new record in September, according to Morningstar’s latest fund flows.

Despite the record outflows seen in the second half of this year, European equities still account for a healthy €13.8bn in YTD net inflows. But it is likely that this figure will drop significantly in the remaining three months of this year, as the latest Morningstar figures do not include October yet. All major stock exchanges in Europe lost more than 10% of their value last month, something which is likely to have led to even higher outflows.

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Pan-European equity sentiment among European fund selectors is still on the positive side however, though the percentage of buyers has come down significantly this year, from more than 60% in Q1 to 37% now. However, data for most countries date back to the beginning of September, so sentiment might have deteriorated further.

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North-South divide?

EIE’s most recent events send a mixed picture. Fund selectors from Denmark illustrate the shifting alt=''trend perfectly, with buying numbers halving from April to October to just 27%, while the number of sellers increased from 0 to 21%. Swedish fund selectors have stayed more positive about the asset class, but 80% of delegates at our EIE Sweden event in September said they had recently reduced their exposure to European equities.

In Southern Europe, however, faith in European equities seems unbroken. Two thirds of the 50 fund selectors attending our seminar in Barcelona last month said they will step up exposure to the asset class. In Milan, the number of buyers is four times as high as the seller quote. 

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