Equity rally fails to boost flows in Europe

Recent equity market rallies have failed to boost inflows into European equity funds in July, according to Morningstar.

European equity funds shed €5.3bn in July and money market funds lost a net €10.23bn in the month, reversing the trend of inflows to money market funds in the first half of the year.

According to the data provider, European funds in total saw net inflows of €16.1bn (£12.8bn) in July, compared with €1.2bn in outflows the month prior.

Morningstar said that while investors were continuing to avoid equities, “plenty of risk taking was evident on the bond side” as investors piled into high-yield, corporate and emerging markets bond funds.

Bond funds dominated July fund sales, attracting net inflows of €19.3bn, the best month for the asset class since at least 2007.

US High Yield Bond funds topped bond fund sales with inflows of €2.1bn, while short term and government bond funds saw substantial outflows.

Pimco was the highest selling fund provider in Europe in July, with net inflows of €3.8bn, the majority of which went into the firm’s GIS Total Return Bond fund.