Fixed Income and Emerging Markets Continue to Lure European Investors in August

European fund investors continued to reposition their portfolios toward fixed-income assets and away from equities in August, following a pattern already set in motion in July when the United Kingdom’s Brexit vote sent shockwaves through capital markets.

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Investors in open-end funds added to their bets in fixed income, with the asset class’ monthly tally of EUR 23.6 billion surpassing even the EUR 22.0 billion inflow seen in July.

Overall, European open-end funds saw net inflows of EUR 26.4 billion in August. Equity funds saw outflows of EUR 4.1 billion, lifting the year-to-date net outflows from open-end equity funds to EUR 71.7 billion. However, global emerging-markets equity funds, which led all categories with inflows of EUR 3.0 billion, received inflows of EUR 9.6 billion. Global emerging-markets fixed-income funds investing both in hard and local currencies also fared well with combined inflows of EUR 4.2 billion in August.

Further findings from Morningstar’s fund flows report for August include:

  • Although asset losses were widespread among equity funds, total outflows of EUR 4.1 billion were moderate compared to July’s negative tally of EUR 13.2 billion.
  • Passive open-end equity funds received EUR 10.6 billion net inflows year-to-date.
  • The Nordea-1 Stable Return fund, which carries a Morningstar Analyst Rating of Bronze, has seen 126 per cent organic growth year-to-date with EUR 10.0 billion of inflows. With the fund’s size now more than EUR 18 billion, Nordea announced a soft-closing on 7 September.
  • August was less difficult for Franklin Templeton than previous months, however outflows of EUR 1.3 billion from its long-term funds were the highest for any fund provider. Year-to-date, Franklin Templeton fund outflows correspond to 14 per cent of its end-2015 assets under management.
  • After a year marked by outflows, in August HSBC drew EUR 745 million into its Japan Index Fund, while its fixed-income funds saw inflows of EUR 701 million.


Matias Möttölä, SeniorManager Research Analyst for Morningstar, comments:

“The breadth of investor interest in fixed-income funds in August was such that 71 of Morningstar’s 93 European fixed-income categories saw inflows during the month. Recent flows into fixed-income have been motivated by a global flight to safety after the UK’s Brexit vote and also by rising expectations of continued low rates and further extraordinary measures by central banks to accommodate growth in the global economy. At the same time, investors continued to withdraw from active equity funds, despite generally positive returns for stocks during the month.”

For the full report, please click here. To speak to a Morningstar analyst about fund flows, please get in touch at 020 3194 1352 or christopher.krantz@morningstar.com.

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Om forfatteren

Matias Möttölä, CFA

Matias Möttölä, CFA  Matias Möttölä, CFA, on Morningstar.fi-sivuston päätoimittaja ja rahastoanalyytikko

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