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Investors sell US equities buy Europe

According to Morningstar’s fund flow figures for February, net outflows from US equities totalled €4.2bn, the highest number since records began three years ago. European investors see the US an expensive market with a monetary policy now unsupportive of equity markets.

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While investor appetite for US equities is at all-time lows, which is confirmed by EIE’s proprietary data showing sellers outnumber buyers in almost all European countries, the opposite is true for European stocks. European fund selectors continue to tell us they think the ECB’s monetary policy is conducive to equity markets on the continent, and they are putting their money where their mouth is. Europe’s fund buyers almost unanimously tell us they intend to increase their allocation to European equities. In February net inflows indeed increased more than seven-fold to €6.1bn, the highest number in a year’s time. This is a sharp contrast to just a couple of months earlier. Investors pulled out a net €8.3bn in October and November combined, and inflows turned net positive only in January this year.

Breaking records

But Europe’s fund buyers are not only stocking up on European equities. Net inflows into absolute return and multi-asset funds are also at record levels. Inflows into alternative Ucits strategies totalled €6.6bn, breaking the previous record of February last year. Multistrategy funds once again topped the charts with almost €3bn in net inflows.

Multi-asset funds took in even more money, a staggering €19.3bn in February alone. This was also an all-time high. Net inflows into the category have now been in the double-digits for four consecutive months. This is, it’s becoming a little one-sided now, also a record.  

Part of the Bonhill Group.