European mutual funds hit 11th month of outflows

Net outflows from European mutual funds hit €18.8bn (£16.26bn) in March, marking the 11th consecutive month of losses as investor confidence is knocked by political and economic uncertainty.

Outflows have hit €58.3bn in the year-to-date, according to the latest data by Lipper, due to risks including Brexit and trade wards.

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However, bond funds, which were the best selling individual asset type in March, saw inflows of €16.4bn in the month.

“Generally it can be said that investors are pulling money out of the active managed fund market, as they may want to reduce their exposure to more risky asset classes like equities,” Detlef Glow, head of Emea research at Lipper, said.

“This might be driven by the general geopolitical situation as well as political risks, including Brexit and trade wars, and economic risks.

“That said, we witness that investors buy into higher risk sectors in the bond market, as they are hunting for yield.

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Investors also pulled money out of mixed asset funds and alternative UCITS funds, which have been popular over last few years in a trend that started after the 2009 financial crisis.

Glow said: “This reaction of the investors might have been caused by the fact that a number of the favoured funds have not delivered on the expectations of the investors during the market turmoil in the fourth quarter of 2018.”