European fund demand slumps with growing uncertainty

Figures from the European Fund and Asset Management Association (EFAMA) confirm the current slump in demand for equity and bond funds.

Data drawn from 23 associations representing more than 97% of total UCITS and non-UCITS assets at end June 2011 reveal the full extent of recent trends. 

EFAMA reports that the main development to highlight from this data is that UCITS witnessed a swing in net sales in June to record net outflows of €2bn, after recording net inflows of €22bn in May.

EFAMA believes this turn around in net sales is attributable to large net outflows from money market funds and reduced net sales of equity and bond funds.
 
Long-term UCITS (excluding money market funds) experienced reduced net inflows in June of €7bn, down from net inflows of €16bn in May.

Whereas, balanced funds continued to record strong net sales for the month increasing to €6bn, up from €5bn.

The same good news cannot be felt in the bond funds sector as here there was a drop in net sales to break-even point, after recording net inflows of €8bn in the previous month.
 
Equity funds experienced a turnaround in net flows during June to record net outflows of €3bn, after recording net inflows of €1bn.

Money market funds experienced large net outflows for the month amounting to €36bn, significantly lower than the net inflows of €6bn recorded in May.

EFAMA explains that this large net outflow reflects the cyclical pattern of flows out of money market funds at the end of each quarter and resembles similar net outflows recorded at end December 2010 (€37bn) and end June 2010 (€34bn).
 

Total non-UCITS net sales increased to €9bn in June, which is considerably higher than the net inflows of €1bn which were recorded in May.  

Special funds (funds reserved to institutional investors) saw net inflows increase to €6bn during the month from break-even point the previous month.

Total assets of UCITS amounted to €5,809bn at end June, a decrease of 2% since end May.  Total assets of non-UCITS also witnessed a decrease in net assets of 0.5% to stand at €2,08bn.
 
Bernard Delbecque, Director of Economics and Research, said, “Uncertainty regarding the strength of the global economic recovery and increasing tensions in the euro area sovereign debt markets undermined investor confidence in June, prompting lower demand for equity and bond funds.”

 http://www.efama.org