The November equity rally prompted by the election of Donald Trump as the next US president failed to generate an enthusiastic turnout among European open-end fund investors. While Europe-domiciled equity exchange-traded funds took in record inflows of EUR 8.4 billion in November, open-end equity funds saw net outflows of EUR 1.48 billion in the wake of the surprising election of the Republican candidate. Fixed-income funds fared even worse, hemorrhaging close to EUR 14 billion, which made November the worst month for European open-end bond funds since the taper tantrum in June 2013.
Although alternative funds saw net inflows in November, the inflows amounted to only EUR 227 million, a very far cry from the level of inflows witnessed in an average month in the past years and the lowest level of inflows into alternative funds in a one-month period since September 2014. This modest net demand resulted from heavy outflows from long-short equity and equity market-neutral strategies, while inflows into alternative multistrategy funds continued. Allocation funds pulled in a relatively modest EUR 1.82 billion.
While Trump’s election prompted pronounced shifts in investors’ behavior, it failed to dislodge the trend towards passive investments. The shift from active to passive remained a prominent feature of Europe´s fund market in November as open-end equity and bond index funds continued to receive handsome inflows and actively managed bond and equity funds reeled under outflows. (Bond ETFs, however, were deeply in negative terrain, as they were in November, too.)
Money market funds posted net inflows of EUR 15.6 billion, which bore witness to the fact that many open-end fund investors were in a risk-off mode.
The Morningstar Direct Asset Flows Commentary for Europe for November can be downloaded here.
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