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Pensions

Investors respond to political risks

Investors respond to political risks

Mona Dohle
Thursday 26th July 2018

European bond and equity Ucits funds posted net outflows in May as investors turned towards multi-asset and alternatives, amid growing concerns over geopolitical risks.

Net sales of Ucits funds recorded outflows of €9bn (£7.9bn) during the month, €52bn lower than recorded in April, data from the European Fund and Asset Management Association (EFAMA) says.

Instead, investors turned their attention towards diversification as inflows into multi asset increased marginally but remained steady at €9bn (£7.9bn) and inflows into alternative funds jumped to €8bn (£7.1bn), compared to net outflows of €3bn (£2.6bn) in the previous month, EFAMA said.

“Rising trade-related tensions, increased political risks and gradually normalising inflation caused a spike in investor risk aversion in May, resulting in net outflows from equity and bond funds,” comments Bernard Delbecque, EFAMA’s director of economics and research.

More recent Lipper data sketches an even more dramatic picture, recording €22bn (£19.5bn) of net outflows from European mutual funds in June, with the asset classes traditionally regarded as a safer investment in times of volatility (bonds and money market funds) showing the strongest outflows.

Overall, European investors pulled €15bn (£13.3bn) from fixed income and €16.4bn (£14.5bn) from money market funds in June, Lipper revealed. At the same time, more broadly diversified vehicles, such as multi-asset funds, reported marginal inflows of €3.4bn (£3bn), whilst alternatives such as real estate funds and commodity funds attracted €1bn (£0.8bn) and €0.2bn (£0.1bn) of investors’ money respectively, Lipper said.

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