Are European investors bored with bond funds? Not yet, if the sales of funds in April are anything to go by. It was only in October that the asset class generated a record level of inflows (compared to Lipper’s sales monitoring since 2002), but this month’s €35.4bn set the bar even higher. This helped to drive net sales for the industry as a whole above the €50bn mark for only the third time in the past five years.
One might have expected sales of equity funds to collapse in light of the near doubling of inflows to bonds, but while activity was down, net sales for the asset class stayed in positive territory (€2.8bn). There are two important aspects to consider here. First, when looking solely at funds sold cross-border equity fund sales actually improved slightly this month, up from €6.4bn to €6.7bn. Second, outflows from ETFs (-€1.3bn) dragged down the net sales total for equity funds across Europe, without which the total would have stood at €4.1bn. Conversely, inflows to bond-based ETFs boosted that asset class’s sales total by €1.9bn in April.
Global and Flexible bond fund categories together attracted inflows of €12.7bn in April; amazingly this is double the average monthly sales for these funds over the past year. Sales of emerging market bond funds nudged up slightly (across local currency, hard currency and corporate funds) to €4.3bn, although this is below the level achieved in January (€7.8bn).
Small cap equity funds of different types again fared pretty well, with combined inflows of €3.8bn. headed by US and Japanese small caps. By contrast, UK equities suffered outflows for the twenty sixth month in a row (-€1.6bn in April), taking outflows from the sector to nearly -€40bn (-€39.7bn) since the sustained investor aversion began in earnest four years ago.
If appetite for emerging market debt is weakening slightly, then it is far more pronounced for emerging market equity funds, where sales dropped for the third month in a row, albeit still at a pretty healthy €1bn. Instead it was Japanese equity funds that were the most popular equity category this month, with net sales of €3.2bn, their largest monthly inflow since January 2006 (€5.1bn).
To read the June issue of Lipper Fund Flash with related tables and graphs, please click here.