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Latest Fund Flows Data from Morningstar Shows Bond Funds Dominated in 2012

Despite the challenging macroeconomic environment, European investors added EUR 26.6 billion to long term funds in December 2012, bringing total net inflows to long-term funds for the year to EUR 204.6 billion. Bond funds enjoyed an unprecedented boom in 2012 with inflows of EUR 176.5 billion during the year, approximately 10 times the inflows of 2007 to 2011 combined.

Key findings from Morningstar’s report on asset flows through December 2012 include:

  • Within fixed income, higher-yielding bond funds received far more inflows than government bond funds.
  • Although they bounced back somewhat in the fourth quarter, equity funds saw net outflows of EUR 6.8 billion in 2012.
  • Allocation funds had a good 2012; mixed-asset vehicles saw EUR 29.7 billion in net new money with cautious and flexible funds profiting the most.
  • Money market funds did not fare so well in 2012, posting outflows of EUR 28.7 billion in the year’s second half.
  • PIMCO Total Return, which has a Morningstar Analyst Rating of Gold, was the most popular fund among European investors in 2012; PIMCO also topped the list of the top 10 fund groups by estimated net flows for 2012.

Ali Masarwah from Morningstar’s European research team comments: “Bearing in mind that the eurozone crisis is not resolved, Europe’s fund promoters fared reasonably well in 2012. Investors had a huge appetite for bond funds, with most money flowing to high-yielding products. Not surprisingly, bond specialist PIMCO was the top asset gatherer for the year. Equity funds were sought after in the fourth quarter, but these inflows did not compensate for the redemptions equity offerings suffered in the first nine months of the year.”