Investors continued to flee from equity funds in August, latest Morningstar fund flow data reveals

27 September 2012

Investors continued to flee from equity funds in August, whilst sending staggering net inflows of EUR 16.95 billion to bond funds, according to Morningstar’s latest European fund flow data. The same pattern emerged in the United States, where net inflows into fixed-income funds surpassed USD 30 billion in August. Although August’s European inflows remained well below July’s record of EUR 22.9 billion, the run on bond funds abated just slightly compared with previous months’ flows into European fixed-income products.

Key findings from Morningstar’s report on August asset flows include:

  • Long-term funds took in nearly EUR 11.72 billion in August, bringing their year-to-date total to EUR 90 billion.
  • Equity funds saw net outflows of EUR 7.02 billion; funds in Morningstar’s US large-cap blend equity category suffered most, shedding net EUR 810 million.
  • A handful of equity categories saw inflows in August; US Equity – Currency Hedged saw the highest investor demand, posting net inflows of EUR 324 million.
  • Alternative funds gained momentum, with EUR 713 million in net inflows.
  • Allocation funds saw net inflows of EUR 587 million; the EUR cautious allocation category topped the list, with net inflows of EUR 356 million.
  • “Other Bond”, a mixed bunch, comprising Italian target maturity funds, a few emerging-markets bond funds, and the widely popular AB American Income Portfolio was the most popular Morningstar fund category in August, attracting EUR 1.88 billion.
  • PIMCO tops the list of fund promoters by new inflows in August, collecting EUR 3.1 billion (excluding money market funds).

Ali Masarwah from Morningstar’s European research team comments: “Yield-hungry investors are continuing to pin their hopes on corporate bonds, especially high-yield and emerging-markets debt. Conversely, safe-haven vehicles investing in USD, EUR, and GBP government bonds remained on European investors’ sell list in August. In an uncertain market environment, investors stuck to the assurance offered by familiar names with PIMCO topping the list of fund houses with the greatest inflows during the month.”

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