Still apparently shaken by the spike in volatility earlier this year, European investors continued to shun equity markets in April. Comforted by the European Central Bank’s March announcement that it would start buying non-financial investment-grade bonds on top of government debt, asset-backed securities, and covered bonds, investors continued to favour fixed-income open-end funds, which saw net inflows of EUR 20.2 billion during the month, according to Morningstar’s estimates.
For equity funds, April was the fourth consecutive month of outflows despite generally positive returns – investors pulled EUR 6.4 billion from equity funds during the month. Global emerging-markets equities was the most notable category to buck this trend, with inflows of EUR 1.6 billion. Altogether equity funds have seen outflows of EUR 28.7 billion year to date. In contrast, allocation and alternative funds continued to see moderate inflows, which helped lift the total tally for European long-term open-end inflows to EUR 21.2 billion in April.
Further findings from Morningstar’s fund flows report for April include:
Matias Möttölä, senior manager research analyst for Morningstar, comments: “April inflows into fixed-income funds followed net inflows of EUR 11.6 billion in March, which broke a year-long trend of outflows from the asset class. But whereas in March investors focused on funds that would benefit directly from the ECB’s new buying program, in April they showed broader trust in the asset class, favouring funds with higher risk such as those investing primarily in high-yield and emerging-markets bonds.”