Fixed IncomeApr 16 2014

Long-term fund sales on the up in Europe

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Data from the European Fund and Asset Management Association found that 26 fund management houses, representing 99.6 per cent of the total market, reported a dip in sales from €69bn (£57.2bn) in January, attributable to outflows from money market funds during the month.

However, figures excluding money market funds were more positive, with long-term funds seeing their highest inflows since January 2013. Long-term fund sales were worth €40bn (£33.1bn) in January.

Bernard Delbecque, director of economics and research at EFAMA, said a major sales bounce for bond funds was “the main driver” behind increased net sales of ‘long-term’ funds in February.

He explained that this was caused by investor expectations of “continued subdued inflation and low interest rates”.

Net sales of bond funds jumped from €13bn (£10.7bn) in January to €24bn (£19.9bn) in February.

Adviser view

Robert Forbes, chartered financial planner at London-based Plutus Wealth Management, said: “Bond funds are becoming increasingly popular for clients looking for a bit of income that can overshoot inflation. However, it is hard to tell how much of it is based on concrete evidence about the underlying financials.”