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A global bond boom is on, latest Morningstar European asset flows data reveals

The latest Morningstar European asset flow data shows that long-term funds enjoyed a strong first quarter, receiving more than Euro 50 billion of new investor assets. Of this, more than 70 per cent went to fixed-income funds, while equity funds, by contrast, had net redemptions for March and only slightly positive inflows for the quarter.

Key findings from a Morningstar research report released today include:

First-quarter 2012 asset flows:

Long-term funds absorbed more than Euro 50 billion of investor assets during the first quarter; fixed-income funds took by far the largest share with inflows of more than Euro 37 billion during the period.

BNP Paribas took in the greatest inflows for the quarter—some Euro 7.6 billion— marking its strongest quarter since 2009.

Bond-heavy houses BlackRock and PIMCO attracted more than Euro 3 billion and Euro 5.5 billion, respectively.

Of the quarterly inflows into fixed-income offerings, those focused on corporate debt, corporate high yield, and emerging markets dominated.

Long-term equity funds saw a mildly positive quarter, attracting just over Euro 2 billion in inflows; equity-focused fund groups Fidelity and DWS saw quarterly outflows.

For equity investors, emerging-markets and income-oriented funds proved most popular; Aberdeen Global Emerging Markets had inflows of Euro 1.5 billion for the quarter, and M&G Global Dividend and Templeton Asian Growth saw inflows of nearly Euro 1 billion each.

Global Emerging Markets Allocation was the fastest-growing category of any meaningful size, seeing quarterly organic growth in inflows of 34%.

March asset flows:

Long-term funds absorbed more than Euro 16 billion of investor assets in March; fixed-income funds took by far the largest share, with inflows of nearly Euro 14 billion during the month.

Equity funds saw the greatest March outflows of any asset class, with net redemptions of Euro 1.3 billion.

Money market funds saw March inflows of more than Euro 10 billion, enough to move the asset class back into the black.

French fund house Amundi attracted Euro 5.2 billion, its greatest monthly inflows in recent years.

Dan Lefkovitz from Morningstar’s European research team comments:

“A global bond boom is on. But recent European flows to bond funds should not be interpreted as a vote of confidence in the Eurozone. Investors are clearly differentiating between troubled governments and profitable corporations, and between the indebted West and cash-flush emerging markets.”