Morningstar: Investor flows reflect little appetite for risk

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The “low optimism and little appetite for risk” of European investors was reflected in May’s flows into long-term funds, data from Morningstar suggests.

The fund data provider reports €40bn (£34.2bn) of investor assets flowing into long term funds with allocation funds – which diversify portfolios across assets – taking a record €11bn over the month.

Standard Life Investments took the lion’s share of assets with its UK-domiciled and recently launched Luxembourg-based Global Absolute Return Strategies strategy capturing €2.6bn.

Fixed income funds continued to do well with net flows of €20bn in May. M&G Optimal Income saw its second consecutive personal-best monthly figure, reporting a net monthly inflow of €1.2bn in May.  

Morningstar’s European fund flows team member Dan Lefkovitz says: “Europe’s economic problems, the threats to Chinese economic growth, and uncertainty over the direction of global monetary policy are clearly weighing on investor sentiment. 

“Fears surrounding China’s economy made Morningstar’s China equity category May’s least popular, with Asia ex Japan equity and BRIC equity also suffering outflows. 

Equity funds saw ”muted” net inflows of €3.6bn. Lefkovitz says: “Bearish sentiment drove outflows from many categories focused on UK, European, and eurozone equities.

”The most popular Morningstar categories in May contained bond or equity funds offering yield and those that are wide-ranging in their pursuit of opportunity.”