In June, European asset managers suffered the worst month for fund flows in five years with equity funds suffering a sell-off worth €6bn according to data from Morningstar.

Equity trackers experienced their first negative month in June since May 2016 with over €3.6bn in outflows.

It has been a volatile year for investors as Brexit negotiations, the rate of interest rate hikes and a trade war between the US and China have loomed over the market.

Emerging markets, Japan and Europe are all out of favour, while US large cap equity, global and tech funds were in vogue.

There were approximately €3.3bn in outflows from emerging markets funds and €1.6bn in outflows from Japan as well as €1.5bn from European funds.

Bond funds were unpopular with outflows nearly topping €11bn across the industry. In a bid to de-risk portfolios, investors sold off high yield bond funds.

Morningstar EMEA editorial research director Ali Masarwah says: ‘After market volatility staged a comeback in February, asset flows to European domiciled funds progressively slowed down until April and dipped into negative terrain in May and June.’

This marks a significant contrast to last year’s performance after record inflows.

Masarwah argues investors remain confident that healthy earnings growth is likely to continue in the US, but are cautious about the rest of the world.

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Issue Date: 07 Aug 2018