Posted inEquitiesEuropeUnited Kingdom

European fund flows turn positive again

Investors poured in a net €866m into the asset class, the first net inflows since June last year. The renewed popularity of European equities, though it hasn’t yet come close to the highs seen early last year.

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European fund selector appetite, as measured by EIE, has climbed steeply in recent months, promising a further rise in fund inflows during the coming months. Data collected this year in Brussels, Frankfurt, Copenhagen, Barcelona and Helsinki all show European equities as by far the most popular asset class. The exception is Stockholm, where US equities are the local fund buyer favourite. On top of that, in all of the above cities an overwhelming majority of fund selectors were convinced ‘Q€’ will mainly benefit the equity markets.

Pound wise

These investors seem to expect this beneficiary effect to be confined to eurozone equities, as all other equities registered net outflows. The strongest outflows this month were recorded for UK equities. Net outflows were even the highest ever seen, at €2.5bn. UK equities returned 17.25% in euro terms in the 12 months to February, with the majority of this return coming from the common currency’s devaluation against the pound (see chart below). European investors therefore seem to be taking their profits now, with UK exporters (on much the same note as their US equivalents) expected to start feeling the effects of their relatively expensive currency. 

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Part of the Bonhill Group.