Morningstar: European funds post inflows after June exits


European investors’ sentiment “reversed” during July 2013 with a return to long-term funds following a month of massive outflows in June, says Morningstar.

The latest Morningstar Direct Asset Flows Commentary for Europe shows inflows of €26.8bn (£22.7bn) for European open-ended funds during July, compared with outflows totaling €35bn over the course of the previous month.

Morningstar attributes the change in sentiment during July to a rebound in equity markets following a period of volality, at the same time as the “nervousness” of bond investors appears also to have receded.

All long-term categories saw inflows over the month with the exception of property and commodity funds which suffered net outflows. Equity funds proved the most popular during July, says Morningstar, with new inflows reaching a total of €10.22bn. 

Fixed-income funds are also said to have “recovered somewhat”, posting inflows of €5.47bn. However this figure also marks the lowest level of positive inflows since May 2012.

High-yield bond categories saw the most significant inflows, with US high-yield in particular seeing a “stark contrast” with July inflows reaching €3.47bn compared with €3.75bn outflows during June.

Elsewhere diversified bond and European government bond funds are said to have “fallen out of favour” with investors over the month.

Within equities, US large-cap blend and global equity income funds proved the most popular with European investors. Both categories also topped all other equity categories year to date, posting inflows of €5.43bn and €10.84bn respectively.

BlackRock stood ahead of other asset managers during July after seeing net inflows across equity, bond and allocation funds of some €2.2bn.

Only three of Europe’s largest asset managers in Europe experienced net outflows in July, with Pimco taking the hardest hit while BNP Paribas saw the highest outflows from euro diversified bond and euro ultrashort bond funds. 

Notably amongst Europe’s biggest open-ended funds, Morninstar highlights that the £17.8bn SLI Global Absolute Return Strategies fund recorded another month of inflows, albeit at a more modest pace, following the announcement of the departure of GARS “architect” Euan Munro.

Morningstar put the SLI GARS fund under review for the second time in 12 months following the news of Munro’s exit, who will be replaced by Guy Stern.