Investors drop bond funds as eurozone crisis escalates

Investors have dropped bond funds in favour of money market funds as the eurozone debt crisis escalates, the European Fund and Asset Management Association (Efama) says.

Net inflows into money market funds moved back into positive territory in November to €4 billion (£3.3 billion), up from net outflows of €20 billion in the previous month.

Money market funds struggled throughout last year, although the pace of outflows slowed in recent months. According to Efama’s latest monthly fund factsheet, November was only the second month money market funds have recorded inflows since August 2009.

Net inflows into bond funds, on the other hand, weakened considerably in November. They dropped from €8 billion in October to €287m. Net inflows into equity funds fell from €13 billion to €8 billion. (article continues below)

Overall, Efama says, the eurozone problems had only a “modest” impact on November’s net sales of equity funds. Ucits funds saw net inflows of €16 billion, up from €7 billion in October. This increase was mainly owing to the large swing in net outflows in money market funds.

Long-term Ucits, which exclude money market funds, saw net inflows of €12 billion in November, down from €26 billion. Year-to-date they have seen net inflows of €215 billion, up from €156 billion for the same period in 2009. Net inflows into non-Ucits reached €117 billion year-to-date, up from €31 billion.

Total Ucits assets increased by 1.8% in November to €5,815 billion. Non-Ucits assets increased by 1.1% to €1,887 billion.