European investors poured in a net €1.1bn into European equity funds in May, the smallest amount since June 2013. In April, net inflows stood more than three times higher at €3.7bn. The new low follows a gradual slide in inflows since the new monthly net inflow record for European equities was set in January this year at €7.1bn.
Emerging markets take the lead
Since then investor uncertainty over the course markets will take has gone up, which was reflected in an increase in inflows into money market funds. These funds took in a net €7bn over the month. Despite the smaller appetite for European stocks, they still remain the most popular equity asset class. Inflows into emerging markets equities, which have recently come back in favour with investors, are still slightly lower than those towards funds invested in European-domiciled stocks.
Regarding fund selector sentiment, emerging markets have already overtaken European equities, the latest EIE data suggest. While emerging markets stocks are currently the most popular asset class in more than half of the European countries EIE services, appetite for European stocks has come down considerably from the all-time highs recorded during the start of the year, even though it has stayed in positive territory relatively comfortably.
Graph: Pan-European fund selector sentiment towards European equities