Morningstar’s latest fund flows data indicates that fixed income suffered in August as investors brace for rising rates. As the U.S. Federal Reserve laid out a timetable for the tapering of bond buying, commonly known as QE3, investors embarked on a selling spree, redeeming long-term funds on a substantial scale. According to Morningstar data, long-term European funds posted net redemptions of EUR 2.1 billion in August. Bond funds suffered the most, with investors withdrawing EUR 7.9 billion; outflows from equity funds totalled some EUR 683 million.
Further findings from Morningstar’s latest fund flows report include:
Ali Masawah, from Morningstar’s European Fund Flows team comments: “August’s open-end asset flows data makes apparent the impact of the tapering debate. European investors shunned emerging-markets equities and bonds and invested in allocation funds and alternative products. Notably, previously unloved fund categories European and Eurozone large-cap equities have profited from the stampede out of emerging-market assets. Looking ahead, it remains to be seen if the Federal Reserve’s September 18 refusal to slow down asset purchases will calm investors and reverse this trend.”