European investors are abandoning bond funds as they grew nervous about the rise in interest rates but have come back to long term mutual funds, as inflows of 26.8 billion in July replaced outflows of 35 billion seen in June, according to the fund flow data from Morningstar.
According to the data, the asset flow data for August showed outflows of 2.13 billion for long terms funds, while asset allocation and alternative funds remained in positive territory, with inflows of 4.31 billion and 1.44 billion respectively.
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The report showed that bond funds suffered the most, with investors withdrawing 7.93 billion over the month whereas money market funds have attracted 7.85 billion over the month, in spite of a threatened clamp-down by the European Commission.
Morningstar’s July data has pointed that equity funds are taking the biggest share of new assets, with 10.2 billion in net inflows.
According to the report, European large cap funds saw inflows of 1.6 billion while EUR Flexible Allocation – Global and Global Large Cap Blend Equity saw inflows of 1.14 billion and 772 million respectively.
US large cap blend and global equity income attracted inflows of 5.4 billion and 10.8 billion respectively.
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By GlobalDataThe report found that US large cap growth equity saw outflows of 680 million, as investors finally decided that valuations were over-stretched. However, Local currency bonds saw outflows of 1.442 billion, while global emerging market equity saw outflows of 1.389 billion and fixed-income funds saw inflows of 5.5 billion.
The high yield bond fund categories have attracted strong inflows with dollar high yield bonds attracting 3.5bn, and global high yield bond funds some 2.1 billion. But both euro and dollar diversified bond categories saw outflows of 1.7 billion.
In terms of individual funds, the PIMCO Total Return Bond fund saw outflows of 1.1 billion in assets, while the Franklin Templeton Global Bond fund, lost 532 million. Carmignac Patrimoine saw outflows of 455m, while Standard Life GARS saw only minor outflows as investors added a total of 627 million to both versions of the fund.
