Investors retreat into cash in August

Investors across Europe retreated into cash in August as sales of equity and bond funds turned negative.

According to the latest data from Lipper, €3.5bn (£3bn) flowed into European funds in August mainly due to €5.9bn of net inflows into money market funds.

The flight to cash was concentrated in mainland Europe as the euro-denominated money market funds were the only ones to see net inflows, with both sterling and dollar-denominated versions seeing outflows.

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In addition to cash, investors also flocked to short-dated bond funds, which saw inflows of €1.8bn.

Detlef Glow, head of Europe, Middle East and Asia research, said: “The shift toward money market and short-duration products in euros may indicate an increasing risk aversion of European investors.”

According to Lipper’s early estimates of September flows, equity funds saw substantial inflows, topping €4.7bn in the Luxembourg and Ireland-domiciled funds examined.

However, bond funds continued to see outflows, of €2.2bn, as investors abandon the asset class in the face of rising yields and falling prices.