EUROPE – Investment funds in Europe are having a boom year, with the total inflows by end of May of €151bn already ahead of the total invested in all of 2004 of €133bn, according to latest figures from Feri Fund Market Information in London.
Despite these inflows, European investors still appear to be in defensive mode, Feri FMi states, as 72% of the €151bn invested so far has been into bond and money market funds, which have taken in respectively €61bn, up from €16.2bn in same period of 2004, and €47.9bn, up from €23bn, to end-May.
German investors were been responsible for 15% of bond fund sales so far this year, with Italy and Spain being strong players since February. French investors allocated €39bn to money market funds, accounting for over a quarter of the European total.
Equity funds, which took in €31.5bn last year, only saw a €21bn inflow in the period this year. Feri FMI reckons that German and Italian investors are using recovery in the equity markets as the opportunity to cash out. By contrast, the French were net equity investors, putting some €1.4bn into equities in May alone, though 97% of this was in exchange traded funds (EFTs) or index tracker funds.
Balanced funds are doing well this year with investments of €3.7bn in the first five months, up from €1.3bn in the same period last year, while for property funds it was the reverse as they saw an outflow of €804m compared with an intake of €2.5bn.
With stock markets continuing to perform well this year, Feri FMI said it believes that equity fund sales should increase in the third quarter, particularly ETFs and indexed funds.
Diana Mackay, managing director of Feri FMI said: “Even when European investors are buying equity funds, they are doing so defensively.”