Bond funds suffer investor ‘exodus’ in June, says Morningstar


Fixed income funds accounted for nearly half of the total outflows seen during June, according to the latest European asset flow data from Morningstar.

Investors withdrew almost €57bn from the European funds industry during June, with fixed income products hit hardest by outflows of around €30bn.

Morningstar says the ”exodus” from bonds in Europe mirrored events in the US in relative terms. Outflows from bond funds in Europe were 1.75 per cent of beginning assets, whereas in the US the figure was 1.88 per cent.

All of the 10 funds with the highest losses in June were from the high yield, flexible or emerging market bond categories.

AllianceBernstein Global High Yield lost the most, posting net €2.23bn in outflows, almost 11 per cent of assets. This was followed by Pimco GIS Total Return Bond fund, which lost €1.8bn.

Europe’s largest open-ended fund, the Templeton Global Bond fund, also suffered losses totaling €1.1bn during June.

After nine straight months of inflows, equity funds were also faced with the highest level of outflows seen since May 2012, with outflows totalling €9.5bn.

Long-term funds saw significant losses of more than €31bn, while money market funds suffered outflows of almost €25bn and €2.6bn exited emerging market funds.

Other sectors faired better during June, with inflows of €7.3bn for allocation funds and €2.7bn for alternative funds. Morningstar’s alternative mulit-strategy category proved the most popular, attracting €1.6bn worth of net inflows for the month.

Pimco suffered the highest outflows at a group level with net outflows of €4.05bn. Despite this, Morningstar says that the group’s inflows for the second quarter remained positive, and year to date it still shows impressive inflows of €10.87bn.

However AllianceBernstein’s net loss of €3.59bn in June mean flows dipped into the red for the year to date, according to Morningstar.

Of the largest 10 providers, BlackRock had the highest net inflows of €3.6bn for June. However Morningstar notes that this could be inflated by a large increase in AUM of €1.7bn in an equity tracker fund and the launch of five new allocation funds.

Morningstar asset flows product manager Syl Flood says: “June marked another month of investor trepidation. Bond fund investors grew nervous over the potential for rates to rise further and bailed out of fixed-income funds accordingly.

”Outflows of €9.5bn from equity funds, the asset class’s largest since May 2012, shows equity fund holders were also spooked.”