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long term funds bounce back

Investors flocked back to long-term funds in July, according to investment researcher Morningstar’s latest European asset flow data


European open-ended funds posted inflows of €26.8bn in July – partially reversing the outflows seen in June, when investors withdrew some €35bn from long-term strategies. Apart from property and commodity funds, which suffered net outflows, all long-term categories saw inflows in July.

Equity funds enjoyed the largest individual share of new assets, with some €10.2bn in net new money; US large-cap blend and global equity income were the most popular fund categories, collecting inflows of €5.4bn and €10.8bn respectively.

High yield bond categories also saw inflows after suffering significant redemptions in June, amid reports that the US Federal Reserve was to phase out its so-called “quantitative easing” programme. However, fixed income funds saw inflows of just €5.5bn overall – the asset class’s lowest monthly inflow since May 2012.

High yield ‘carried the day’

“[In July] in particular, diversified bond funds and euro government bond funds fell out of favour, while high yield and short-term bonds carried the day,” wrote Ali Masarwah from Morningstar’s European Fund Flows team.

“Arguably this reflects investors’ preference for the less interest rate-sensitive credit and shorter-duration investments in times of rising interest rates.”

BlackRock stood out as the big winner in July, with net inflows across equity, bond and allocation funds of some €2.2bn. Of the largest asset managers in Europe, only three saw net outflows in July. Pimco suffered most with outflows of €1.4bn, driven by redemptions of €1.2bn from the Pimco GIS Total Return Bond Fund.

As Expert Investor Europe reported last month, BlackRock, JP Morgan, Franklin Templeton and Pimco generated combined inflows of more than €50bn in the first half of 2013, equating to almost a third of total European fund sales, according to Lipper.

A PDF of the Morningstar report can be downloaded from the company’s website, here.