Multi asset and bond funds dominate fund flows

European investors are increasingly flocking to multi-asset and absolute return products, according to the latest data from Morningstar.

The research provider’s latest data on fund flows in May showed that ‘allocation’ funds, its category for multi-asset, saw their strongest month for inflows since records began, bringing in €11bn (£9.4bn).

Alternative funds, which mostly consist of absolute return strategies, brought in €2.7bn of net new money, with its year-to-date inflows of €14.5bn already surpassing the inflows for the whole of 2012, which was itself a record yearly intake.

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Morningstar said the Standard Life Global Absolute Return Strategies fund again took the “lion’s share” of the money flowing into absolute return funds.

Fixed income funds continued to see significantly more inflows than equity funds, at €20bn compared to €3.5bn, with Richard Woolnough’s giant M&G Optimal Income fund a particular beneficiary with €1.2bn of new money.

The best selling sectors were all those offering a level of income, with the top five consisting of four bond fund sectors and the Global Equity Income sectors.

By contrast, China funds saw the most net outflows due to concerns over growth and the banking system, while UK large-cap equity funds continued to shed money and have now lost nearly €5bn so far this year.