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UK funds in demand as Europeans hedge currency risk

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2 Nov 2018

European investors gradually adjusted their cautious outlook on the UK despite overall bearish fund data across the continent for the past five months.

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European investors gradually adjusted their cautious outlook on the UK despite overall bearish fund data across the continent for the past five months.

European investors gradually adjusted their cautious outlook on the UK despite overall bearish fund data across the continent for the past five months.

Non-euro currency markets stood out in October, having been the only ones to attract moderate in-flows amid an overall bearish market climate.

Throughout September, European mutual funds reported net out-flows of €40.5bn (£35.6bn) with investors pulling money out of all major asset classes, the latest data from Lipper at Refinitiv reveals.

Among others, bond funds reported net out-flows of -€8.9bn, followed by alternative Ucits (-€8bn), mixed asset funds (-€1.9bn), equity funds (-€1.3bn).

Euro denominated money market funds reported the sharpest out-flows (-€15.2bn) in withdrawals, while GBP and NOK denominated money market funds reported modest in-flows of €0.3bn and €0.2bn respectively.

This pattern was also replicated in fund flows by country, with the UK’s fund market reporting the highest net in-flows at €2bn, followed by Switzerland (€1.1bn) and Norway (€0.4bn), while the majority of European fund markets reported net out-flows, suggesting that investors turned increasingly wary on the outlook for the eurozone.

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