Investors were pouring their cash into fixed-income funds last month, with Morningstar data showing that this particular asset class had its highest net inflows in more than a year.
“Fixed-income funds saw their strongest inflows since August 2010, led by corporate debt offerings. Investors are clearly hungry for yield and consider corporate balance sheets to be healthier than those of Western governments,” says Dan Lefkovitz from Morningstar’s European research team.
Morningstar’s European fund flow data for February shows fixed-income funds attracted the vast majority of investor cash for the month, with EUR 12.5 billion in inflows.
Pimco, M&G, and AllianceBernstein were all the big beneficiaries of inflows to bond funds. Amongst the bond categories, euro-denominated corporate bonds saw the greatest inflows, followed by several high-yield categories.
Overall, the fund industry had positive inflows, with more than EUR 15 billion in new assets flowing into long-term European-domiciled funds.
Meanwhile, equity funds saw a modest outflow of investor capital, with some EUR 189 million redeemed in February. Funds investing in Europe, the UK and the US were particularly unpopular. This outflow data is generally in line with a longer-term trend: investors are withdrawing their money from equity funds.
Money market funds also saw notable outflows in February, giving up some EUR 13 billion during the month.
“After sending money into funds of all types in January, European investors were more selective in February,” says Lefkovitz.