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European fund industry records EUR190bn of sales in 2009

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The European fund industry showed a remarkable turnaround in 2009 with total sales of EUR190bn as opposed to net redemptions of EUR298bn the previous year, according to the latest Fund Flash from Lipper FMI.

The report says 2008’s reliance on the money market fund has all but evaporated, causing the long-only total for 2009 to be even higher at EUR235bn.

The change in the industry’s fortunes has been caused by low interest rates and a six-month rally on the stock markets.

In the yield-starved environment, the promise of good returns on investment grade bond funds gained appeal and money poured in throughout Europe.

Overall, the bond class drew in net sales of EUR86bn and corporate investment grade accounted for nearly half (EUR36bn) — by far and away the best sector of the year.

At the same time, stock market advances were hard to ignore, particularly in emerging markets. But as the year progressed, support for core sectors began to consolidate.

Global equities emerged as the strongest sector, pipping emerging market equities to the post by EUR2bn. Despite the strength of the bond category, the equity class attracted the greater proportion of sales with net inflows of EUR112bn for the year — almost exactly the amount that had been redeemed in 2008.

Money market outflows in December totalled EUR35bn, putting the industry in the red by EUR6bn. They have been in the red since September, recording net outflows of EUR85bn in that time.

Flows were more promising than expected in other asset classes in December. A strong uptick in the stock markets galvanised investors and equity had its second best month of the year (EUR15bn). Total December sales, ex-liquidity, jumped to EUR29bn, several times better than the EUR7bn registered in December 2008.

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