Fixed income flows rise, according to Efama

Demand for fixed income funds rose in August while net sales of equity funds fell to nearly zero, according to the European Fund and Asset Management Association (Efama).

This suggests that investors remained cautious as they worry about the global  economic recovery and risks of a double-dip recession.

Bond funds contributed strongly to the large rise in long-term Ucits funds, that is Ucits funds excluding money market funds. Net inflows into bond funds rose from €9 billion (£7.9 billion) in July to €23 billion in August.

Balanced funds also saw their net sales increase in August. However, demand for equity funds weakened. (article continues below)

Money market funds, which had been struggling until recently, saw net inflows of €16 billion, up from net outflows of €11 billion in July.

Overall, Ucits funds saw inflows of €54 billion, compared with inflows of €5 billion in July. This was mainly down to long-term Ucits, which saw inflows of €38 billion in August, compared with €16 billion in July.

Fund flows turned around quickly. In June, Ucits funds suffered outflows of €31 billion.

Efama says this is the highest level of net sales since it started collecting monthly net sales data in October 2008.

Ucits and non-Ucits funds combined saw their assets increase by 2% month-on-month, to reach €7.5 trillion.