Across stocks and bonds, the trend is clear: Europe is unloved, latest Morningstar European asset flows data reveals

30 May 2012

The latest Morningstar European asset flow data shows a positive start to the second quarter of 2012, with both short- and long-term European funds attracting net inflows. In April, investors added more than €14 billion to money market funds and approximately €4.3 billion to long-term open-end funds. Fixed-income funds dominated flows, especially funds focused on corporate and non-European debt. Equity funds saw their second consecutive month of net outflows in April, with Morningstar’s eurozone large-cap equity category suffering its fourteenth straight month of outflows.

Key findings include:

  • Fixed-income attracted almost €6 billion in investor assets in April.
  • Fixed-income funds that avoid European government debt dominated flows, with the USD high-yield bond, GBP corporate bond, global bond, and global emerging-markets bond the most popular among Morningstar’s fixed-income categories.
  • April saw net inflows of more than €1 billion for allocation funds, while property funds had very small inflows.
  • Equity funds experienced their second consecutive month of mild net outflows, with approximately €1 billion exiting the asset class.
  • Morningstar eurozone large-cap equity suffered its fourteenth consecutive month of outflows in April, losing €900 million; Europe large-cap value equity has lost €2 billion in the year to date; and France large-cap equity suffered similar outflows.
  • Alternatives, commodities, and convertibles funds saw cumulative outflows of €1.7 billion.
  • Several European-domiciled ETFs focused on Euro STOXX 50 saw outflows in April, with €4 billion exiting iShares DAX.
  • Alliance Bernstein American Income benefitted significantly from investors’ desire for non-European bonds, with inflows of- € 500 million in April, bringing its year-to-date inflows to €2.4 billion.
  • UBS had inflows of approximately €3.3 billion--its largest monthly intake on record--driven by the firm’s equity index trackers focused on U.S., European, global, and Japanese stocks.

Dan Lefkovitz from Morningstar’s European research team comments: “Despite market jitters, inflows to funds domiciled in Europe were positive to start the second quarter. But the funds attracting the capital are mostly investing outside of Europe, both on the equity side and the bond side.”

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