French savers are changing their attitude towards risk and long-term investments.

The latest survey by Europerformance, which tracks French pooled fund flows and performances, shows that the money market funds haemorrhage continued during the first quarter of 1997. For the first time, reallocation of assets toward equity funds is significant.

French savers had tended to buy back in the first quarter the funds they had sold in the fourth quarter of the preceding year for fiscal window-dressing. For instance, net inflows in the first quarter of 1996 reached Ffr78bn ($13.7bn), essentially due to money funds collections.

For the first time in 1997, money continued to leave the funds instead of returning to them. After Ffr114bn of net outflows from money market funds in the fourth quarter of 1996 they faced Ffr17bn redemptions in the first three months of 1997. Total assets in money funds retreated to Ffr936bn, or 46% of the total French funds market (54% if Ffr166bn in dynamic treasury funds is included). This change is to be expected as French savers realise that short-term rates will remain around 3% for a while.

What is more encouraging is the great renewal of interest in equity investments. Equities and balanced funds gained Ffr52bn to reach total assets of Ffr425bn at the end of March. For the first time their market share represented 21% of all French funds. Net new flows accounted for more than 25% of the assets’ growth, with Ffr14bn in subscriptions. Even in France, times are changing.